LIBRARY 

OF  THE 

University  of  California. 

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Class 


THE  ECONOl.IIC  SIDE  OF 
WORKS  MANAGEMENT 


A  THESIS  PRESENTED  TO  THE  FACULTY  OF  THE  GRADUATE 
SCHOOL  OF  THE  UNIVERSITY  OF  PENNSYLVANIA  IN  PAR- 
TIAL FULFILMENT  OF  THE  REQUIREMENTS  FOR 
THE  DEGREE  OF  DOCTOR  OF  PHILOSOPHY 

BY 

JOHN   CHRISTIE   DUNCAN 


11 

UNJV 


fuN 


O  '.■ 


THE  ECONOMIC  SIDE  OF 
WORKS  MANAGEMENT 


A  THESIS  PRESENTED  TO  THE  FACULTY  OF  THE  GRADUATE 
SCHOOL  OF  THE  UNIVERSITY  OF  PENNSYLVANIA  IN  PAR- 
TIAL FULFILMENT  OF  THE  REQUIREMENTS  FOR 
THE  DEGREE  OF  DOCTOR  OF  PHILOSOPHY 


BY 


JOHN   CHRISTIE   DUNCAN 


Copyright,  1911,  by 
D.  APPLETON  AND   COMPANY 


/••.;:•  :/:'.,.^  '::..:;••....' 


PEEFACE 


This  thesis  appeared  in  1907  in  the  Business  World 
under  the  title  of  The  Economic  Side  of  Works  Manage- 
ment. The  understanding  was  that  reprints  would  be 
made,  but,  unfortunately,  before  that  could  be  brought 
about  the  magazine  changed  hands,  the  manuscript  was 
lost,  and  the  plates  destroyed. 

The  writer  would  have  reprinted  the  articles  as  they 
appeared  in  the  Business  World  had  it  not  been  for  the 
fact  that  the  paper  was  materially'  changed  for  editorial 
purposes  without  his  knowledge  or  consent,  and  some  of 
the  parts  were  omitted  which  should  have  appeared.  To 
have  reprinted  the  paper  as  it  appeared  in  the  Business 
World  would  not  have  done  justice  to  the  thesis  nor 
have  been  a  creditable  piece  of  work  for  a  Doctorial 
dissertation. 

In  the  meantime  the  writer  had  started  a  book  on  the 
general  topic  of  the  Principles  of  Industrial  Management, 
and  had  used  his  thesis  notes  as  a  basis  for  the  third 
part  of  the  book.  The  publishers  of  the  book  did  not 
feel  free  to  let  the  rewritten  thesis  appear  before  the  book, 
and  as  it  was  impossible  to  reprint  the  original  thesis, 
the  authorities-  of  the  University  of  Pennsylvania  very 
generously  consented  to  accept  the  third  part  of  the  book 
in  order  to  fulfill  the  technical  university  requirements. 
This  reprint  contains  all  the  original  matter  in  the  first 
thesis,  but  it  is  presented  in  a  little  better  form. 

224683 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/economicsideofwoOOduncrich 


CHAPTER  XIII 

THE  THREE  TYPES  OF  ORGANIZATION 


1 


In  Parts  I  and  II  the  questions  which  the  business  exec- 
utive must  consider  have  been  discussed.  The  creation  of 
an  ideal  equipment  solves  about  one  half  of  the  problem  of 
industrial  management.  The  plant  must  yet  be  put  under  a 
satisfactory  organization  before  it  can  be  well  managed.  The 
works  manager  must  so  combine  the  equipment  which  has 
been  given  him  with  labor  and  material  that  the  product  of 
the  plant  will  be  the  cheapest  and  best  that  can  be  manu- 
factured. The  sales  department  must  put  the  goods  on  the 
market  efficiently. 

The  works  manager's  field  in  the  concern  is  limited  to 
the  production  department  of  business.  His  work  begins 
with  the  receipt  of  the  order  and  ends  with  its  shipment. 
He  has  nothing  to  do  with  the  soliciting  of  orders,  he  is  not 
concerned  with  the  finances  of  the  firm  nor  with  its  legal  diffi- 
culties. His  work  begins  and  ends  with  production.  To 
perform  his  duties  ideally : 

1.  He  must  get  the  work  performed  rapidly. 

2.  He  must  get  the  work  performed  accurately. 

8.  He  must  get  the  maximum  result  from  the  machinery. 

4.  He  must  get  the  maximum  product  from  the  raw  ma- 
terial. 

5.  He  must  see  that  improvements  in  methods  are  intro- 
duced. 

In  order  to  get  this  work  performed,  there  have  been 
evolved  three  kinds  of  industrial  organization — ^the  military, 
functional,  and  departmental  types. 

183 


:fti    THE  BRmeiPLES  OF  INDUSTRIAL  MANAGEMENT 

•'  '"VKe^Mtllktry^  "System  of  Organization. — This  is  the  old- 
est and  was  almost  the  only  one  until  very  recent  years. 
According  to  the  military  scheme,  all  power  and  authority 
for  directing  the  work  emanate  from  one  man,  who  is  held 
responsible  for  everything  that  is  done  in  any  part  of  the 
division  under  his  control.  With  his  plan  the  leader  does 
not  give  general  directions  and  then  look  for  results.  He 
keeps  control  of  all  details  that  arise  within  his  sphere  of 
command.  The  armies  of  former  ages  were  run  according 
to  this  plan.  The  general-in-chief  gave  directions  concern- 
ing the  health  of  the  men,  the  way  they  should  march;  he 
saw  to  the  provisioning  of  the  troops,  and  in  fact  Caesar, 
Napoleon,  Frederick,  and  many  other  great  military  leaders, 
directed  the  affairs  of  the  state  as  well.  Curiously  enough 
the  modern  army  is  no  longer  run  according  to  the  old  style 
military  system.  The  health  of  the  troops  is  under  the  care 
of  a  distinct  body  of  men,  the  provisioning  and  supplying  of 
the  troops  is  attended  to  by  another  group  of  officials.  The 
commander-in-chief  now  decides  upon  the  general  plan  of 
the  campaign.  He  plans  where  and  how  battles  shall  be 
fought,  but  modern  warfare  no  longer  makes  it  possible  for 
him  to  lead  his  men  as  did  the  youthful  Alexander,  the 
great  Napoleon,  or  as  did  Scott,  Lee,  or  Grant  in  American 
history.  The  army  now  has  a  staff  organization  which  cor- 
responds very  closely  to  the  departmental  system  used  in  the 
progressive  firms  of  to-day. 

With  the  military  system  of  industrial  organization  every 
officer  in  each  division  or  subdivision  is  held  responsible  for 
all  that  happens  within  his  province.  No  matter  what  mis- 
takes are  made,  he  is  the  one  who  must  stand  the  conse- 
quences. If  a  foreman  has  charge  of  a  shop  and  that  shop 
runs  behind  in  orders,  is  extravagant  in  the  consumption  of 
supplies  or  power,  or  is  deficient  in  the  quality  of  work 
turned  out,  the  foreman  in  charge  is  responsible.  He  is 
given  a  division  presumably  sufficiently  small  to  make  it 


THE  THREE  TYPES   OF  ORGANIZATION  185 

possible  for  a  reasonably  good  man  to  look  after  details,  and 
everything  is  considered  distinctly  within  the  scope  of  his 
duties.  He  is  expected  to  keep  his  men  always  supplied 
with  work.  He  must  see  that  the  machines  are  in  working 
order.  He  must  be  able  to  select  good  men  and  keep  them. 
If  any  question  arises  concerning  how  things  should  be  done, 
he  should  be  able  to  give  explicit  directions.  He  must  de- 
tect work  that  is  not  properly  done,  know  on  whom  to  saddle 
the  blame,  and  must  also  remedy  the  faults.  In  a  word,  he 
must  be  a  thorough,  all-round  man  to  fill  his  place  properly. 
A  trained  man  of  ordinary  ability  can  efficiently  direct 
from  fifty  to  one  hundred  and  fifty  people  in  simple,  ordi- 
nary tasks  which  require  little  mechanical  ability.  It  is  only 
the  exceptional  man  of  considerable  experience  and  famili- 
arity with  the  work  who  can  profitably  direct  more  than  one 
hundred  and  fifty  or  two  hundred  workmen.  In  continuous 
industries,  of  both  the  synthetical  and  analytical  types,  a 
large  number  of  processes  are  simply  and  easily  directed. 
The  work  is  almost  entirely  routine.  The  machinery  is  nearly 
if  not  quite  automatic.  There  are  no  great  calls  upon  the 
intelligence  of  the  foreman,  because  there  is  very  little  to  be 
done  outside  of  seeing  that  the  workers  are  at  their  posts  and 
are  turning  out  an  adequate  amount  of  material.  In  such 
industries,  the  military  organization  is  ideal,  because  the  task 
should  be  quite  within  the  limits  of  the  foreman's  ability, 
and  the  responsibility  can  be  constantly  fixed  upon  him.  If 
he  fails  to  prove  equal  to  his  position,  there  is  no  great  diffi- 
culty in  obtaining  another  man.  Generally  speaking,  the 
executives  of  these  types  of  industries  do  not  find  their  labor 
management  problems  difficult  of  solution  in  the  production 
departments.  Their  energies  can  be  directed  toward  the  dis- 
tributive department,  and  to  finding  a  corps  of  workers  who 
will  develop  the  mechanical  efficiency  of  the  machinery,  look 
to  the  economies  of  the  processes  and  power-saving  possibil- 
ities and  to  other  similar  questions, 


186    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

In  industries  which  depend  to  a  greater  extent  upon  the 
ingenuity  and  efforts  of  the  laborer  who  cannot  be  so  greatly 
aided  by  machinery,  the  military  organization  shows  its 
weakness. 

The  machine  shops  in  the  assembling  industries  were 
the  first  to  feel  the  limitations  of  the  military  system.  For 
many  years,  no  one  noticed  its  deficiencies,  because  the  shops 
were  small  and  one  man  could  attend  to  all  the  details  and 
give  a  fair  degree  of  satisfaction.  When,  however,  the  de- 
partments grew  to  more  than  two  hundred  workmen,  the 
scheme  began  to  break  down.  No  one  could  look  after  all 
the  details  of  so  large  a  shop.  It  was  useless  to  discharge  the 
overseers,  because  no  one  could  be  found  equal  to  the  task. 
It  is  a  dictum  in  management  that  if  punishment  by  dis- 
charge does  not  eliminate  failures  and  mistakes  in  an  or- 
ganization the  scheme  in  itself  is  vitally  wrong. 

Works  managers  gradually  came  to  appreciate  that  the 
defects  were  due  to  the  system,  so  they  sought  to  eliminate 
the  weaknesses  of  too  highly  concentrated  authority  by  divid- 
ing the  leadership  among  several  men,  each  being  equally 
responsible  to  the  superintendent.  This  solved  the  problem 
of  giving  the  foreman  a  reasonable  number  of  people  to  look 
after,  but  it  increased  the  unproductive  labor  expenses  and 
tended  to  make  a  conflict  in  authority  and  interests.  For 
example,  the  foreman  of  the  machines  in  order  to  make  a 
good  showing  would  be  apt  at  times  to  have  his  men  rush 
the  work  through  in  a  hasty  manner,  expecting  the  erecting 
gang  or  bench  hands  to  make  good  his  deficiencies.  The 
bench  foreman  would  also  slight  his  work.  If  heavy  castings 
were  to  be  moved  by  the  cranes,  two  foremen,  equal  in  au- 
thority, would  put  the  riggers  and  crane  men  in  an  exceed- 
ingly unpleasant  situation  because  both  would  insist  upon 
immediate  attention.  There  was  but  one  outcome.  The  rig- 
gers served  whomsoever  they  pleased.  The  writer  is  familiar 
with  a  shop  where  the  riggers  were  bribed  by  an  ambitious 


THE  THREE  TYPES   OF   ORGANIZATION  187 

gang  boss  to  attend  to  his  requests.  He  needed  the  services 
of  the  crane  for  a  considerable  length  of  time.  However, 
there  were  intervening  periods  of  a  half  hour  or  so  in  which 
the  crane  could  be  used  to  fill  machines'  and  move  other  cast- 
ings. Instead  of  using  this  time  and  making  the  favored 
man  wait  an  occasional  quarter  or  half  hour,  the  riggers  stood 
by  the  job,  holding  up  the  machines  and  erectors  the  better 
part  of  the  day.  Of  course  this  is  an  exceptional  and  most 
glaring  example  of  the  weakness  of  this  scheme,  but  it  is 
nevertheless  a  weakness  which  grows  out  of  too  extended  a 
spreading  of  the  military  system. 

Briefly  summarized,  the  advantages  of  the  military  system 
of  management  are : 

1.  It  unifies  the  work,  putting  it  all  in  the  hands  of  one 
individual. 

2.  It  fixes  the  responsibility  for  the  performance  of  tasks 
in  a  definite  manner  upon  certain  individuals. 

Its  disadvantages  are: 

1.  When  a  plant  becomes  too  large  the  foremen  are  held 
responsible  for  too  many  things,  and  cannot  justly  be  held 
accountable  for  blunders  or  for  smallness  of  productivity  in 
machines  and  men. 

2.  The  foremen  have  so  much  to  do  that  they  cannot  see  to 
the  introduction  of  improvements  as  rapidly  as  is  desirable. 

The  military  system  of  works  organization  in  a  large  con- 
cern leads  to  chaos  in  management,  because  it  fails  to  pre- 
vent bad  work  and  to  stop  the  nursing  of  jobs.  It  has  no 
means  of  rewarding  the  efficient  man  or  of  punishing  the  poor 
worker  or  loafer.  Managers  of  plants  who  worked  with  the 
military  system  in  their  younger  days  were  puzzled  as  to  why 
the  later  generation  developed  so  few  good  foremen  and  why 
it  brought  forth  so  many  poor  workmen.  They  did  not  rec- 
ognize the  fact  that  it  was  due  not  to  a  degeneration  in  the 
younger  members  of  the  community  but  to  an  inherent  fault 
in  the  system.     Thoughtful  students  felt  the  need  of  some- 


188    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

thing,  but  hardly  knew  what.  Some  plants  tried  varying 
schemes  of  running  their  work.  Several  concerns  hit  upon 
the  plan  of  piece  wage  payment  and  careful  inspection  of 
material  by  independent  inspectors  who  were  held  responsi- 
ble. This  scheme  has  worked  with  a  reasonable  degree  of 
success,  but  there  are  so  many  ways  of  fooling  the  inspector 
and  of  getting  bad  work  passed,  and  there  are  so  many  possi- 
ble evasions  of  the  piece  wage  scheme  that  it  was  soon  re- 
alized that  another  change  was  necessary  before  this  method 
would  prove  efficient.  The  piece  wage  payment  and  inspec- 
tion scheme  did  lead  to  something  better. 

Piece  workers,  on  account  of  the  fact  that  they  are  working 
for  themselves,  are  insistent  upon  allowances  being  made  for 
all  kinds  of  contingencies.  The  manufacturer  finds  it  more 
profitable  to  lighten  their  duties,  and  to  limit  as  little  as 
possible  the  movement  of  the  workers.  He  soon  begins  to 
study  how  the  work  can  be  divided  and  men  assigned  to  cer- 
tain parts.  From  this  development  arose  the  functional  sys- 
tem of  organization. 

The  Functional  System. — The  greatest  exponent  in  Amer- 
ica of  the  functional  system  of  organization  is  Mr.  Frederic 
W.  Taylor,  a  past  president  of  the  American  Society  of 
Mechanical  Engineers.  Mr.  Taylor  has  held  a  great  number 
of  responsible  positions  in  various  sections  of  the  country, 
and  has  made  an  enviable  reputation  in  the  engineering 
world.  His  paper  entitled  ' '  Shop  Management, ' '  delivered 
before  the  Society  of  Mechanical  Engineers,  is  a  memorable 
contribution.  In  that  paper  he  discussed  the  management 
of  a  shop  under  the  functional  system  of  organization. 

^  'Functional  organization  consists  in  so  dividing  the  work 
of  management  that  each  man  from  the  assistant  superinten- 
dent down  shall  have  as  few  functions  as  possible  to  perform. '  '^ 

1  Cf .  Transactions  American  Society  of  Mechanical  EngineerSf 
Vol.  XXIV,  Paper  No.  1003,  p.  1391, 


\  THE  THREE  TYPES  OF  ORGANIZATION  189 

The  scheme  is  based  upon  the  theory  of  the  division  of  labor 
as  applied  to  management.  A  workman  in  a  machine  shop 
according  to  this  plan  is  not  under  one  but  several  foremen. 
Mr.  Taylor  advocates  four  shop  bosses :  gang  boss,  speed  boss, 
inspector,  and  repair  boss.  The  gang  boss  has  charge  of  pre- 
paring the  work  up  to  the  time  that  the  piece  is  set  in  the 
machine.  He  must  show  his  men  how  to  set  the  work  on 
the  machine  in  the  quickest  possible  time  and  in  the  best 
possible  way.  The  speed  boss  has  the  function  of  providing 
the  proper  tools  for  the  workman  on  the  machine.  He  must 
see  that  the  cuts  are  started  at  the  right  place  and  that  the 
machine  is  speeded  up  to  its  proper  limit.  The  inspector  is  re- 
sponsible for  the  quality  of  the  work,  and  both  workmen  and 
speed  bosses  must  finish  the  work  to  suit  him.  The  repair 
boss  sees  that  each  machine  is  kept  in  working  condition, 
is  clean,  free  from  rust  and  scratches,  and  is  properly  oiled. 
In  addition  to  these  four  shop  overseers  the  workmen 
come  into  contact  with  the  representatives  of  the  planning 
department,  whose  function  is  to  relieve  the  shop  foremen  of 
all  thought  of  how  the  work  should  be  arranged  and  distrib- 
uted to  the  machines.  Four  representatives  of  the  planning- 
room  also  come  in  contact  with  the  workmen,  the  order  of 
work  or  route  clerk,  instruction  card  man,  time  and  cost 
clerk,  and  the  shop  disciplinarian.  The  route  clerk  writes  a 
daily  list,  instructing  the  workmen  and  all  shop  bosses  as  to 
the  exact  order  in  which  the  work  is  to  be  done  by  each  class 
of  machines  or  men.  The  instruction  card  man  states  in 
writing  the  general  and  detailed  drawing  to  refer  to,  the  piece 
number  and  cost  order  number  to  charge  the  work  to,  the 
special  jigs  to  use,  the  depth  of  cut  to  be  made,  the  number 
of  cuts  to  make,  and  the  time  in  which  the  job  should  be  fin- 
ished. He  also  sets  the  piece  rate.  The  time  and  cost  clerk 
sends  to  the  men  through  the  instruction  card  all  the  infor- 
mation they  need  for  recording  their  time  and  cost  of  work, 
and  he  secures  the  proper  returns  from  the  men. 


190    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

"In  case  of  insubordination  or  impudence,  repeated  failure  to 
do  their  duty,  lateness  or  unexcused  absence,  the  shop  disciplinarian 
takes  the  workman  or  bosses  in  hand  and  applies  the  proper  rem- 
edy, and  sees  that  a  complete  record  of  each  man's  virtues  and 
defects  is  kept.  This  man  should  also  have  much  to  do  with  read- 
justing the  wages  of  the  workmen.  At  the  very  least,  he  should 
invariably  be  consulted  before  any  change  is  made.  One  of  his 
important  functions  should  be  that  of  peacemaker."  ^ 

To  quote  Mr.  Taylor  again : 

"The  greatest  good  resulting  from  this  change  is  that  it  becomes 
possible  in  a  comparatively  short  time  to  train  bosses  who  can 
really  and  fully  perform  the  functions  demanded  of  them,  while 
under  the  old  system  it  took  years  to  train  men  who  were  after  all 
able  to  thoroughly  perform  only  a  portion  of  their  duties.  .  .  . 
Another  great  advantage  resulting  from  divided  foremanship  is 
that  it  becomes  entirely  practicable  to  apply  the  four  leading  prin- 
ciples of  management  to  the  bosses  as  well  as  to  the  workmen."  2 

The  four  leading  principles  of  management  to  which  Mr. 
Taylor  refers  in  this  last  statement  are : 

1.  A  large  daily  task  should  be  given  to  the  men. 

2.  The  men  should  be  given  standard  conditions,  making 
it  possible  to  perform  the  task. 

8.  They  should  be  given  a  high  pay  for  success. 

4.  They  should  lose  in  case  they  fail  to  reach  the  require- 
ments of  the  daily  task.  ^ 

Viewing  the  subject  from  a  broader  point  of  view,  there 
are  other  advantages  to  be  gained  from  the  functional  organi- 
zation. 

1.  The  work  is  divided  so  that  one  man  need  attend  to 
only  one  thing.     It  enables  complete  specialization  of  labor. 

2.  It  definitely  fixes  the  responsibility  for  the  performance 
of  each  function  upon  one  man. 

1  Transactions  American  Society  of  Mechanical  Engineers,  Vol. 
XXIV,  pp.  1393.  1394. 

2 Ibid.,  p.  1394.  nbid.,  p.  1368. 


THE  THREE  TYPES  OF  ORGANIZATION  191 

3.  It  allows  the  workman  opportunity  to  think  out  im- 
provements by  enabling  him  to  make  an  intensive  study  of 
his  work. 

Notwithstanding  all  of  these  advantages  the  functional 
system  of  organization  has  not  proven  popular  or  successful 
in  a  number  of  plants  where  it  has  been  tried.  It  causes 
men  to  lose  initiative.  It  has  a  tendency  to  shift  and  divide 
the  responsibility  in  spite  of  the  contrary  intention.  This 
has  been  found  to  be  true  in  several  places  where  the  plan 
has  been  tried.  The  difficulties  that  have  been  encountered 
in  carrying  the  scheme  through  are : 

1.  It  requires  a  great  amount  of  clerical  work  to  fill 
out  instruction  cards  and  write  out  all  orders  and  minute 
instructions  necessary  for  the  complete  enforcement  of  the 
scheme. 

2.  It  is  exceedingly  hard  at  times  to  define  clearly  to 
whom  certain  functions  belong  and  on  whom  the  responsi- 
bility rests  when  things  go  wrong.  For  instance,  no  less  than 
eight  bosses  outside  of  the  shop  disciplinarian  come  into  di- 
rect contact  with  the  workmen.  Four  of  these  men  make  out 
instructions,  and  four  others  say  how  they  should  be  carried 
out.  It  not  infrequently  happens  that  the  man  who  makes 
out  the  instructions  is  somewhat  vague  in  his  directions,  in 
the  hope  that  the  speed  boss  or  gang  boss  will  make  up  de- 
ficiencies. If  a  mistake  occurs  under  these  conditions,  it 
becomes  a  difficult  matter  to  determine  who  is  to  blame, 
because  the  instructions  man  will  plead  that  they  were  not 
interpreted  correctly  and  the  other  bosses  will  assert  that 
such  interpretations  could  be  made.  Sometimes  the  instruc- 
tion card  man  will  give  instructions  and  the  gang  bosses 
may  see  a  better  method.  If  they  do,  the  chances  are  that 
they  will  want  to  put  their  scheme  into  operation.  Hence 
there  will  be  a  conflict  of  authority.  If  a  boss  adheres  to 
the  system  and  doesn't  follow  the  best  method  possible  under 
the  circumstances,  the  firm  is  paying  for  a  system  of  man- 

14 


192    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

agement  which  is  failing  in  its  purpose  of  getting  the  goods 
out  in  the  cheapest  possible  manner. 

3.  It  is  cumbersome  and  expensive  to  operate.  In  every 
shop  the  jobs  must  be  assigned  to  men  at  all  kinds  of  odd 
times  during  the  day.  If  a  workman  desires  to  start  on  his 
job  he  must  come  into  contact  with  at  least  three  of  those 
bosses  before  he  can  do  anything.  There  are  usually  several 
men  desiring  jobs  at  one  time.  Under  a  system  where  the 
workman  is  supposed  to  know  how  to  set  up  a  job  and  inter- 
pret instructions,  he  merely  needs  to  find  out  what  he  is  sup- 
posed to  do,  and  do  it,  calling  on  the  boss  only  when  there 
are  complications.  With  this  functional  scheme  he  is  not 
supposed  to  act  on  his  own  initiative.  As  a  matter  of  fact, 
so  many  bosses  really  hinder  the  work.  They  irritate  the 
men  and  are  expensive  to  keep  up,  because  in  a  large  shop 
they  must  have  a  number  of  sets  of  bosses  to  carry  out  the 
scheme  as  laid  down. 

TJie  Departmental  8yste7n.  —In  advocating  the  functional 
system  of  works  organization,  Mr.  Taylor  made  a  valuable 
contribution  in  that  he  brought  out  the  idea  of  dividing  the 
work  in  such  a  way  that  it  could  be  looked  after  by  func- 
tions rather  than  by  complete  units.  No  plan  of  organiza- 
tion can  be  successful  unless  it  is  workable.  The  military 
type  fails  to  be  workable  in  large  organizations,  because  it 
is  impossible  to  get  men  who  are  capable  of  filling  the  lead- 
ing positions.  With  the  functional  plan  it  is  possible  to 
train  a  sufficient  number  of  men  to  carry  out  the  functional 
duties,  but  it  is  only  under  the  most  exceptional  conditions 
that  these  various  functions  can  be  clearly  defined  and  the 
scheme  worked  without  conflict  and  irritation.  If  there  is  a 
remarkable  man  at  the  head  who  can  smooth  all  points  and 
be  everywhere  present  whenever  a  difficulty  arises  with  con- 
flicting ideas  and  authorities,  the  system  has  a  chance  of 
working;  but  in  this  every-day  world  a  highly  sensitive  or- 
ganization of  that  character,  no  matter  how  perfect  on  paper, 


THE  THREE  TYPES   OF  ORGANIZATION  193 

is  bound  to  be  disrupted  by  the  bumps  and  collisions  of 
daily  strife.  A  finely  adjusted,  compensated  astronomical 
chronometer  will  keep  perfect  time,  provided  it  is  wound  up 
at  certain  stated  intervals,  and  is  kept  from  jars  and  vibra- 
tions and  extremes  of  temperature,  but  for  ordinary  day  use 
to  carry  around  in  the  pocket,  a  dollar  watch  may  prove 
more  satisfactory.  Works  managers  need  the  dollar- watch 
combination,  and  they  have  found  it  in  combining  the  good 
features  of  both  the  military  and  functional  systems  of  or- 
ganization. Hundreds  of  plants  at  the  present  time  use  the 
departmental  system  without  being  fully  aware  of  what  they 
are  doing.  The  departmental  system  does  the  following 
things : 

It  divides  the  plant  up  into  a  number  of  clearly  defined 
departments,  and  puts  each  under  the  control  of  a  gang  boss, 
who  is  given  general  directions  to  work  to  and  is  held  re- 
sponsible for  results  and  not  for  servile  attention  to  detailed 
instructions.  Thus  in  a  machine  shop  there  is  a  man  to  look 
after  the  large  machine  tools,  such  as  lathes,  planers,  and 
milling  machines.  Another  foreman  will  be  appointed  to 
look  after  the  erection  of  the  large  parts  of  the  engine, 
another  will  be  given  a  valve- setting  gang,  and  still  another 
may  be  given  charge  of  the  tool-room,  and  another  will  look 
after  the  stores.  The  riggers  or  crane  men  will  be  under  a 
sub- foreman,  who  will  have  to  keep  all  the  machines  supplied 
with  work.  In  addition  to  these,  the  repair  department  will 
be  in  the  hands  of  one  man,  a  tool-making  and  grinding  de- 
partment in  the  hands  of  another,  and  the  stores  department 
in  the  hands  of  another.  All  of  these  men  will  be  under  a 
head  foreman  or  superintendent.  Each  man  is  held  responsi- 
ble for  the  output  of  his  machines.  When  a  set  of  drawings 
of  an  order  comes  into  the  shop,  the  head  foreman  will  ex- 
amine the  drawings  and  call  in  the  various  gang  bosses.  He 
will  tell  them  the  things  they  are  to  look  after.  Each  man 
clearly  understands,  from  either  written  or  oral  instructions, 


194     THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

his  particular  province.  It  is  then  his  duty  to  keep  his  ma- 
chines going  and  his  men  employed  on  their  particular  tasks. 
The  work,  when  performed  and  inspected,  is  passed  on  to  the 
other  departmental  boss.  If  the  succeeding  gang  boss  finds 
any  defects  in  the  work,  he  must  at  once  report  the  mistakes, 
or  he  will  be  held  responsible  for  all  defects  uncovered  by  his 
immediate  successor. 

The  departmental  system  divides  the  work  up  into  small 
departments,  each  under  the  absolute  control  of  a  man,  and 
the  departments  are  so  related  to  each  other  that  no  individ- 
ual workman  will  have  to  obey  two  bosses.  The  riggers,  for 
instance,  in  the  military  system  served  any  man  upon  re- 
quest. In  the  functional  system,  the  riggers  obey  a  rigging 
boss  who  is  at  the  beck  and  call  of  a  half  dozen  functional 
foremen.  In  the  departmental  system,  the  rigging  boss  learns 
from  the  head  foreman  the  conditions  of  the  large  castings, 
and  about  when  they  are  to  be  moved,  and  adjusts  his  gangs 
in  such  a  way  that  there  will  be  a  minimum  of  waiting 
throughout  the  entire  shop.  If  the  head  foreman  finds  any 
men  idle  due  to  the  fact  that  they  cannot  work  because  cast- 
ings are  not  moved,  he  can  at  once  ascertain  whether  the  boss 
rigger  has  arranged  the  movements  correctly,  or  whether 
there  is  insufficient  crane  service.  Whatever  the  reason, 
there  is  one  man  from  whom  an  explanation  can  be  de- 
manded and  readjustments  promptly  made.  If  the  machines 
are  not  turning  out  sufficient  work  or  are  giving  poor  service, 
the  departmental  boss  cannot  blame  the  speed  boss  or  an  in- 
struction-card boss.  He  has  the  machines  to  look  after.  If 
his  men  are  not  efficient,  he  is  to  blame,  because  he  should 
report  and  discharge  the  delinquents.  If  the  machines  are 
in  bad  condition,  he  is  at  fault,  because  it  is  his  duty  to  re- 
port defects  and  breaks  at  once,  and  insist  that  they  be  re- 
paired. A  machine  boss  should  never  let  a  machine  get  into 
general  bad  repair.  The  erecting  boss  is  to  blame  if  the 
erecting  is  progressing  slowly  or  is  poorly  done.     The  great 


THE  THREE   TYPES   OF   ORGANIZATION  195 

advantage  of  this  departmental  system  is  that  the  responsi- 
bility can  be  fixed;  it  is  possible  to  train  men  to  fill  the  jobs, 
and  it  is  impossible  to  have  any  shifting  of  responsibility, 
because  the  men  must  show  results  in  output,  and  not  prove 
that  they  have  given  or  followed  instructions. 


CHAPTER  XIV 

THE    LABOR   FORCE 

Before  the  employer  can  decide  how  he  is  going  to  run 
his  labor  force  he  must  determine  what  kind  of  labor  he  is 
going  to  use,  because  his  treatment  of  employees  will  be  in- 
fluenced to  a  very  great  extent  by  the  labor  personnel.  The 
labor  force  may  be  men,  women,  or  children.  Adult  male 
labor  is  for  the  greater  majority  of  the  important  industries 
the  most  profitable  kind  of  labor.  There  are,  however,  a 
great  number  of  industries  wherein  women  and  children  may 
be  employed  with  profit,  because  they  work  for  less  wages 
and  have  their  natural  aptitudes  for  the  work.  The  indus- 
tries that  can  employ  women  and  children  are  the  textiles, 
shoe  factories,  and  other  concerns  which  produce  either  light 
materials  or  goods  which  require  deftness  in  handling.  We 
may  compare  male  and  female  labor  in  the  following  way : 

1.  Comparison  of  Male  and  Female  Labor. — Male 
labor  is  stronger  and  has  greater  physical  endurance.  Men 
alone  are  able  to  stand  long-continued  heavy  work,  such  as 
is  required  in  a  shipyard,  steel  plant,  or  locomotive  shop. 

2.  Men  are  more  apt  to  be  permanent  employees.  The 
home  is  woman's  ultimate  sphere.  A  woman's  maximum 
working  period  in  industrial  occupation  is  usually  limited  to 
the  time  she  leaves  the  grammar  or  high  schools  until  she 
reaches  the  age  of  thirty.  In  that  time,  she  may  serve  an 
apprenticeship  to  a  trade,  and  become  a  capable,  conscien- 
tious employee.  She  is,  however,  apt  at  any  time  to  marry 
and  leave  work.  Marriage  increases  a  man's  value  to  the 
firm,  because  he  now  has  new  responsibilities  to  shoulder, 
and  is  more  desirous  of  giving  satisfaction  to  his  employer. 

8.  In  general,  men  have  more   initiative  than  women. 

196 


THE   LABOR   FORCE  197 

Man's  initiative  is  not  due  to  superior  brains,  but  is  the 
result  of  greater  opportunity.  In  the  city,  night  schools, 
Young  Men's  Christian  Associations,  correspondence  schools, 
and  public  schools  offer  inducements  in  the  way  of  courses 
of  study  which  men  can  pursue  during  their  evening  hours. 
These  courses  of  study  are  designed  primarily  for  men's 
needs  in  industry.  A  great  number  of  the  evening  schools 
inform  the  employers  of  the  progress  their  hands  are  making 
in  the  courses,  and  the  employer  is  consequently  apt  to  give 
such  persons  greater  opportunities.  Women  in  the  same  lines 
of  occupation  do  not  have  the  same  encouragement,  they  are 
less  able  physically  to  work  all  day  in  the  mill,  and  then  to 
carry  on  technical  studies  after  working  hours.  There  is  a 
lack  of  incentive  to  attend  these  courses,  because  they  do  not 
in  most  cases  regard  their  work  as  a  life's  career.  Moreover, 
thousands  of  women  and  girls,  after  they  leave  their  factory 
at  the  close  of  the  day,  have  household  duties  to  perform  for 
parents  or  for  the  male  members  of  the  household,  who  are 
also  engaged,  perhaps  in  the  same  mill  or  factory.  Even  if 
they  do  not  engage  in  those  duties,  a  girl  invariably  has  a 
great  deal  more  to  do  than  a^man;  she  usually  makes  much 
of  her  clothing,  often  trims  her  hats,  repairs  her  garments, 
and  looks  after  a  thousand  and  one  things  which  a  man 
turns  over  to  some  one  else  and  pays  for  having  done.  All 
these  things  combine  to  make  man  possess  more  initiative. 
He  has  more  opportunity  to  learn  how  to  do  harder  things, 
has  a  better  physique,  a  greater  incentive  to  make  an  effort . 
to  learn,  and  less  of  other  things  to  do. 

4.  Woman's  clothing  is  a  hindrance  to  her,  and  she  can 
be  employed  only  in  places  where  the  machinery  is  of  such 
a  nature  that  her  clothing  will  make  employment  safe.  In 
places  where  she  could  otherwise  be  more  serviceable  than  a 
man,  firms  take  the  trouble  to  design  the  work-room  and 
machinery  in  such  a  manner  that  she  can  be  employed  with 
safety. 


198     THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

5.  Women's  hours  of  labor  are  more  closely  restricted  by 
law.  Our  labor  laws  justly  seek  to  throw  more  protection 
around  women  and  children  than  around  men.  The  manager 
of  a  plant,  however,  cannot  afford  to  overlook  the  fact  that 
these  are  disadvantages  when  he  considers  women  as  prospec- 
tive employees,  although  it  is  only  a  question  of  time  when 
the  law  will  place  greater  restrictions  upon  male  labor. 
Legislation  and  common  justice  require  conveniences  for 
women  in  wash-rooms,  and  a  supply  of  chairs  for  resting 
during  the  working  period.  Their  hours  of  daily  and 
weekly  labor  are  shortened,  and  they  may  not  be  permitted 
to  work  overtime  except  in  rare  and  carefully  guarded  in- 
stances. 

6.  Men  are  more  disposed  to  form  permanent  labor 
unions;  and,  in  this  respect  men  may  be  more  difficult  to 
deal  with  than  women  as  regards  wage  increases.  Women  do 
not  lack  organizing  capacity,  but  they  are  apt  to  regard  their 
industrial  grievances  as  a  temporary  inconvenience  not  worth 
the  effort  to  remedy. 

In  the  long  run,  powerful  labor  unions  are  better  for  so- 
ciety than  unorganized  labor.  If  the  laborers  of  all  indus- 
tries are  united  in  their  demands,  no  hardship  is  imposed 
upon  any  manager,  because  all  are  on  the  same  basis.  If, 
however,  one  concern  is  compelled  to  yield  to  certain  de- 
mands which  involve  an  outlay  of  money,  and  its  rivals  are 
not  also  put  to  the  same  trouble  and  expense,  it  is  working 
under  disadvantageous  conditions. 

Although  women  do  not  readily  organize  into  permanent 
labor  bodies,  in  some  respects  they  are  harder  to  manage 
than  men.  Many  a  successful  foreman  of  men  would  wreck 
his  reputation  if  he  applied  his  methods  to  women.  Tact  is 
required  to  get  good  results  from  the  girl  in  the  factory,  mill, 
or  office. 

7.  Women  have  an  aptitude  for  certain  classes  of  work. 
In  hosiery  mills,  silk  spinning  establishments,  and  a  great 


THE   LABOR   FORCE  199 

many  operations  in  textile  works  which  require  painstaking 
care  and  deftness,  women  are  better  employees.  In  pottery 
works  her  lighter  touch  and  more  appreciative  sense  of  beauty 
are  valuable  assets. 

8.  Women  work  for  less  money  than  men.  Manufac- 
turers and  managers  of  establishments  which  employ  women, 
agree  that  in  the  lines  in  which  they  employ  the  women,  they 
do  so  because  the  same  grade  of  men  would  demand. a  larger 
wage. 

Under  these  conditions,  the  manager  of  the  concern  must 
study  carefully  his  industry  and  the  parts  of  his  industry  to 
see  where  he  can  introduce  female  labor.  In  lines  of  work 
where  it  is  a  question  of  deftness  of  fingers  and  lightness  of 
touch  or  skill  in  running  small  machines,  women  can  be  em- 
ployed to  advantage.  Anyone  who  has  visited  the  National 
Cash  Register  works  will  be  impressed  with  the  proportion  of 
women  and  girls  employed  on  drilling  machines  and  ma- 
chinery, which  finishes  and  prepares  the  small  iron  and  steel 
parts  of  the  register  for  the  assembler's  hands.  Some  electri- 
cal manufacturing  companies  employ  women  exclusively  in 
a  number  of  their  departments.  In  commercial  lines,  large 
firms  employ  several  hundred  women  in  their  bookkeeping 
departments.  In  one  concern  the  entire  bookkeeping  staff  is 
composed  of  women  who  are  under  the  direction  of  a  man 
head  accountant.  Whether  women  or  men  shall  be  employed 
depends  upon  whether  the  work  can  be  adjusted  so  as  to  suit 
the  peculiar  aptitudes  of  women. 

Child  Labor. — In  some  classes  of  industries  children 
may  be  employed.  The  child  can  be  used  in  a  great  number 
of  operations  in  textile  plants,  glass  factories,  coal  breakers, 
and  other  establishments.  Society  pays  a  high  price  for 
child  labor  in  decreased  vitality  and  efficiency  of  its  adults, 
and  is  now  restricting  the  liberty  of  the  manufacturer  to  use 
children.  The  child  as  a  laborer  has  only  one  advantage  to 
the  manufacturer,  that  of  being  cheap.     Against  this  advan- 


200     THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

tage  the  manager  may  well  weigh  the  disadvantages  of  child 
labor. 

1.  Their  hours  of  labor  are  limited  by  law  in  most  states, 
and  in  those  industries  where  children  are  employed  they  are 
apt  to  limit  the  hours  of  the  adults,  .or  to  compel  the  manage- 
ment to  make  disproportionate  equipment  for  the  child,  as 
compared  with  the  adult,  departments.  The  adults  are  de- 
pendent upon  the  children  for  their  material,  and  when  the 
child  department  shuts  down,  the  adult  department  may 
have  to  discontinue. 

2.  Children  require  more  careful  overseeing.  They  are 
more  apt  to  destroy  or  spoil  material  than  their  elders,  are 
harder  to  keep  at  work,  and  require  a  greater  degree  of  atten- 
tion and  direction.  Unless  constantly  watched,  their  little 
minds  wander  from  their  tasks.  They  are  full  of  animal 
spirits,  and  when  not  under  observation  will  play  pranks, 
which  cause  production  to  cease,  and  even  frequently  destroy 
goods. 

.  3.  Children  are  more  careless  about  machinery  than  are 
adults,  and  more  likely  to  be  injured.  They  are  not  safe 
workers  in  a  plant. 

The  casualty  insurance  companies  do  not  as  a  rule  care  to 
insure  children.  Some  companies  refuse  to  accept  risks  upon 
any  child  under  fourteen  years  of  age.^ 

Nearly  every  firm  employs  boys  of  seventeen  and  under 
for  messengers,  elevator  attendants,  and  similar  workers. 
The  only  reason  for  employing  boys  for  such  positions  is 
their  willingness  to  accept  low  wages.  In  spite  of  his  small 
remuneration,  the  boy  is  not  cheap  when  one  considers  his 
unreliability.     Some  firms  have  had  so  much  trouble  with 


1  This  rule,  if  not  already  adopted  by  almost  all  casualty  com- 
panies, soon  will  be  on  account  of  the  general  tendency  of  states 
to  raise  the  minimum  working  age  of  children  to  fourteen  years  or 
over. 


THE  LABOR   FORCE  201 

boys  in  filing  rooms,  as  messengers,  and  as  office  assistants 
that  they  are  now  employing  for  such  places  men  who  are 
well  past  middle  life  and  are  getting  better  results.  Such 
men  ask  for  more  wages,  but  they  are  well  worth  the  extra 
pay,  for  they  are  much  more  careful,  reliable,  and  faith- 
ful in  fulfilling  their  duties  than  the  youngsters,  and  far  less 
apt  to  leave. 

From  the  broad,  social  point  of  view  it  is  a  question 
whether  boys  ought  to  be  engaged  in  such  occupations  as 
messengers,  elevator  attendants,  and  office  assistants.  From 
fourteen  to  eighteen  a  boy  should  be  preparing  for  his  future 
career;  if  he  cannot  attend  school  or  college  he  should  be 
serving  an  apprenticeship  to  some  trade,  or  be  working  at 
something  which  will  enable  him  to  fill  a  place  of  usefulness 
in  some  office,  store,  bank,  or  similar  place  in  later  years. 
Being  an  office,  elevator,  or  messenger  boy,  is  not  giving  him 
this  preparation ;  and  he  should  not  be  so  occupied  unless  it 
is  merely  a  temporary  expedient  to  obtain  a  position  which 
will  give  him  a  chance  to  develop  his  faculties  for  greater 
things.  The  engaging  of  men  past  middle  life  for  such 
places,  on  the  other  hand,  confers  a  social  benefit,  and  is 
more  satisfactory  to  the  employer,  all  things  being  consid- 
ered. Besides  making  his  selections  of  laborers  along  the 
lines  of  sex  and  age  considerations,  the  manufacturer  must 
CQnsider  the  educational  qualifications  of  his  employees. 

Classes  of  Laborers. — All  industries  require  one  or 
more  of  three  classes  of  laborers  as  regards  mental  caliber, 
education,  and  training. 

I.  Unskilled  Workers. — In  the  continuous  industry  of 
the  synthetic  type  these  men  are  used  to  a  very  great  degree. 
Large  numbers  of  them  are  required  in  steel  plants  as  la- 
borers around  blast  furnaces,  coke  ovens,  the  steel  furnaces, 
and  other  departments.  In  previous  years  they  were  more 
widely  used  than  at  the  present  time.  Some  years  ago  they 
were  employed  in  great  numbers  around  paper  mills,  textile 


202    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

establishments  of  all  kinds,  and  other  plants  of  a  similar 
nature,  but  this  type  of  laborer  is  being  largely  eliminated 
from  the  steel  plant,  and  he  is  gradually  passing  away  from 
all  plants  as  a  type  of  worker.  Conveying  machinery  is  now 
so  extensively  used  and  is  so  efficient  that  the  unskilled  la- 
borer is  no  longer  profitable.  In  the  steel  plants,  he  is  still 
needed  to  some  extent  to  look  after  coke,  slag,  and  other  ma- 
terials, to  shovel  dirt  and  to  attend  to  cinders,  but  his  days 
are  numbered,  not  only  for  steel  making  and  continuous 
industries,  but  for  every  other  type  of  industry  wherein  the 
only  qualifications  are  strength  and  willingness. 

In  the  analytical  continuous  industries,  great  numbers  of 
these  laborers  are  required  to  perform  the  unpleasant  work  of 
unloading  raw  sugar,  of  cleaning  out  apparatus  around  the 
sugar,  oil,  gas,  and  meat-packing  establishments.  They  are 
also  necessary  as  attendants  in  firing  boilers  and,  before  the 
introduction  of  conveying  machinery,  were  required  to  carry 
the  material  from  department  to  department.  Conveying 
machinery  has  eliminated  the  laborer  as  a  draft  animal,  but 
machinery  has  not  made  it  possible  to  remove  him  from  do- 
ing a  number  of  other  unpleasant  duties.  In  time  it  will, 
and  it  is  distinctly  to  the  management's  interest,  as  well  as 
society's,  to  take  him  away  as  soon  as  possible. 

In  the  assembling  industries,  the  unskilled  worker  was 
formerly  employed  to  transport  the  material  from  the  foundry 
to  the  machine  shop  and  between  departments  in  the  shop. 
He  was  a  necessary  adjunct  around  the  shop  to  pull  on  the 
ratchet  for  drilling  holes,  to  sledge,  to  chip  the  rough  cast- 
ings and  set  the  material  up  on  the  machines  for  the  ma- 
chinist to  finally  adjust,  but  now  the  new  factory  has  the 
overhead  crane  which  reaches  every  part  of  the  shop.  A  hy- 
draulic lift  or  chain  block  can  be  placed  at  every  machine, 
so  the  laborer  is  no  longer  helpful  there.  Likewise,  the  air 
drill,  air  hammer,  riveting  machine,  and  air-chipping  ma- 
chine take  away  his  job  in  chipping,  riveting,  and  sledging. 


THE  LABOR  FORCE  ^  ^^«r,. 

In  a  word,  this  laborer  is  being  eliminated  to  such  (a  ^dj}i^<e£/:^qf  ._ 
that  he  will  soon  become  extinct.  \  r-      ^'^ 

II,  The  intermediate  grade  of  laborer  whose  quallfkafg^^^ 
tions  in  addition  to  regularity  and  good  health  must  be : 

1.  Ability  to  learn  to  handle  machinery  of  a  more  or  less 
semi-automatic  type  without  injury  to  himself. 

2.  A  willingness  to  attend  closely  to  such  machinery,  see- 
ing that  it  is  constantly  running  properly,  and  is  always 
supplied  with  material  to  keep  it  producing. 

3.  Ability  to  keep  the  machinery  in  his  charge  in  good 
running  order. 

There  are  three  types  of  machines  : 

(1.)  The  machine  which  needs  an  attendant  merely  to 
keep  it  filled.     Examples  of  this  type  of  machine  are : 

(a)  The  endless  screw-conveying  device,  which  mixes  the 
various  grades  of  raw  sugar  and  molasses  so  that  they  become 
semi-liquid,  capable  of  being  pumped  from  a  tank  to  the  top 
of  the  building,  from  whence  they  are  started  on  their  refin- 
ing process. 

(b)  Shears,  punches,  and  other  cutting  devices  used 
around  iron  works,  shipyards,  and  such  establishments  to 
cut  up  scrap  iron,  plates,  punch  rivet  holes,  etc. 

(c)  The  filter  presses  in  oil  works,  potteries,  and  plants 
which  have  straining  or  filtering  processes. 

(d)  A  great  many  automatic  screw-making  machines  and 
nail  cutters.  These  machines  merely  need  a  rod  shoved  in 
at  one  end  from  time  to  time,  or  a  roll  of  steel  wire  occasion- 
ally started  going  through  the  apparatus.  Everything  else  is 
done  completely  by  machinery. 

(2. )  The  machine  that  does  most  of  the  work  but  requires 
an  attendant  to  be  present  to  make  occasional  adjustments 
and  to  see  that  the  machine  is  running  in  such  a  way  that 
the  material  going  through  is  not  being  spoiled.    Examples : 

(a)  The  modern  turret  lathe,  wherein  the  attendant  neer" 
only  put  the  bolt  or  nut  blanks  in  and  see  that  as  each  step 


204    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

is  completed  on  the  machine  the  succeeding  tool  is  applied 
to  do  the  next  step  at  the  proper  time. 

(b)  The  modern  drill  press.  In  some  cases  the  drill  press 
has  a  great  number  of  spindles,  so  that  the  one  machine  turns 
out  a  number  of  pieces  of  work  at  the  same  time.  Here  the 
attendant  must  be  constantly  on  the  alert  to  see  that  the  vari- 
ous spindles  are  supplied  with  material  in  order  to  keep  the 
entire  machine  productive. 

(c)  The  modern  loom — an  excellent  illustration  of  this 
type  of  machine.  The  more  recent  loom  will  stop  whenever 
a  thread  breaks  in  either  direction  in  the  cloth.  The  atten- 
dant must  be  capable  of  tying  the  broken  threads  and  start- 
ing the  loom  at  any  time.  He  must  be  deft  in  handling  the 
material  and  must  not  mix  threads  or  get  them  tangled  in 
the  weaving  process. 

(d)  The  modern  spinning  frames  or  spinning  mules. 
These  do  not  require  very  great  skill  on  the  part  of  the  atten- 
dant, but  do  need  adeptness  in  handling  the  fine  threads. 

(e)  The  slotting  and  modern  key-way  cutting  machines 
of  the  machine  shop.  The  attendant  must  adjust  the  feed  or 
rate  of  cutting  to  suit  the  requirements  of  the  material  or  the 
machines,  and  must  be  able  to  select  the  proper  tools  for  the 
various  cuts.  The  tools  are  readily  learned  and  do  not  vary 
with  the  same  material  and  cut,  so  that  after  once  learned 
such  machines  can  be  run  by  an  ordinary  person. 

(3. )  The  third  type  of  machines  requires  great  skill  to 
run  because  such  machines  are  designed  either  to  handle  a 
large  variety  of  work  which  must  be  performed  with  exact- 
ing accuracy  or  they  require  unusual  steadiness  of  nerve  and 
skill  to  operate.     Examples  of  these  machines  are : 

(a)  The  large  lathes  and  milling  machines  in  general 
machine  shops.  These  machines  get  a  great  variety  of  work 
every  day;  sometimes  they  are  used  to  bore  out  cylinders, 
again  to  turn  shafting,  and  in  fact  one  never  can  tell  just 
what  they  may  be  called  upon  to  do, 


THE   LABOR   FORCE  205 

(b)  Large  planers  and  shapers  are  another  variety  of 
the  same  class  of  machines.  They  may  be  used  to  cut 
grooves,  smooth  off  the  top  of  plane  surfaces,  finish  the  sides 
of  castings,  and  the  variety  of  castings  they  may  be  required 
to  handle  is  indefinite. 

(c)  Steam  hammers  in  forges,  such  as  make  ship  work 
and  other  heavy  forgings. 

(d)  The  roll  sets  which  make  steel  rails,  structural  iron, 
ship  plates,  and  other  work  of  a  similar  type. 

This  third  class  of  machines  requires  the  services  of  the 
third  class  of  workers  discussed  below. 

III.  A  high  grade  of  skilled  labor. — The  worker  need  not 
be  of  powerful  physique,  but  he  must  be  in  good  health,  and 
possess  the  following  qualifications : 

1.  Ability  to  interpret  accurately  complicated  instructions 
either  from  blue  prints,  drawings,  or  from  written  or  oral 
communication. 

2.  Ability  to  concentrate  attention  on  details,  to  use  skill 
and  patience  in  accurately  carrying  out,  in  the  concrete  re- 
ality, the  pictured  idea  of  the  inventor  or  engineer. 

This  class  of  laborer  is  the  most  highly  skilled  non-pro- 
fessional group  of  people  in  existence,  and  must  be  well  paid. 
Indeed,  they  frequently  obtain  wages  which  compare  favor- 
ably with  the  salaries  of  teachers  and  the  incomes  of  lawyers, 
doctors,  and  other  professional  men.  They  are  needed  in 
foundries  to  make  complicated  castings,  in  the  pattern  shop 
to  produce  the  patterns  for  the  foundry,  in  the  machine  shops 
to  run  the  large  lathes  and  machines  to  which  jobs  of  varied 
dimensions  are  assigned.  Such  a  man  is  entrusted  with  val- 
uable material,  and  if  he  makes  a  mistake  its  results  are  far- 
reaching.  A  pattern-maker  once  misread  a  drawing,  making 
the  inlet  into  the  condenser  on  the  wrong  side  of  the  condens- 
ing apparatus.  The  pattern  went  through  the  foundry.  The 
casting  came  into  the  machine  shop  and  was  machined  in 
many  parts  before  the  mistake  was  discovered,  and  it  cost 


206    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

the  firm  some  $800  to  rectify  the  error.  In  another  case,  a 
man  in  charge  of  one  of  the  large  lathes  misinterpreted  a 
drawing  and  turned  a  certain  piece  of  material  one  thirty- 
second  of  an  inch  smaller  than  it  should  have  been.  The 
casting  was  some  forty  inches  in  diameter  and  seventy-odd 
inches  in  length.  The  mistake  was  discovered  when  it  was 
attempted  to  fit  it  into  the  other  parts,  and  it  was  utterly 
worthless — a  loss  of  several  hundred  dollars  to  the  firm.  It 
is  absolutely  necessary  for  men  holding  such  places  to  be 
thoroughly  equipped.  To  train  a  man  for  this  rank,  he 
must  first  of  all  be  intelligent,  naturally  resourceful,  and  pos- 
sess the  innate  ability  to  visualize  a  described  idea.  To  ob- 
tain the  development  of  these  latent  qualities  the  workman 
must  have : 

1.  A  preliminary  education  of  such  a  degree  that  he  can 
readily  acquire  an  accuracy  in  interpreting  instructions.  In 
a  word,  he  must  have  a  receptive,  active  mind. 

2.  He  must  serve  an  apprenticeship.  This  preparation 
must  be  in  shops,  night  schools,  and  other  places  where  he 
can  learn  more  than  the  mere  routine  of  his  tasks.  He  must 
attain  the  attitude  of  mind  that  we  look  for  in  the  profes- 
sional man,  the  ability  to  depend  on  himself  for  carrying  out 
work,  and  an  unwillingness  to  jump  at  conclusions. 

The  great  problem  of  a  manager  in  any  place  is  to  intro- 
duce machinery  and  so  to  arrange  the  work  that  the  unskilled 
worker  will  be  unnecessary,  and  the  call  for  the  highly  skilled 
man  will  be  small.  Unskilled  exhausting  toil  is  so  monoto- 
nous that  the  emploj^ee  can  take  little  or  no  interest  in  his 
duties,  and  the  work  itself  is  so  unprofitable  that  a  concern 
cannot  afford  to  give  a  wage  that  will  encourage  men  to  be 
alert  and  faithful.  The  man  reasons  rightly  that  if  he  gets 
discharged  he  can  get  as  good  a  job  in  another  place;  and  if 
he  doesn't  find  an  opening,  society  will  give  him  a  living  at 
least,  which  is  little,  if  any,  less  than  he  is  now  getting  out 
of  all  his  exertion. 


THE  LABOR   FORCE  207 

An  organization  which  must  have  a  large  number  of  the 
third  class  of  workman,  the  highly  skilled  man,  is  likewise 
undesirable,  not  because  his  services  are  not  valuable,  but 
because  so  much  depends  on  him.  His  grade  is  so  high  that 
it  is  difficult  to  obtain  him.  He  is  well  worth  his  wages  in 
any  organization  if  he  is  efficient  and  does  not  make  mis- 
takes ;  but  if  he  does  err,  even  occasionally,  considerable  loss 
may  be  entailed.  Therefore  it  is  highly  desirable  to  get 
machinery  to  do  as  much  of  his  work  as  possible. 

The  second  class  of  worker  is  the  most  desirable.  The 
advantages  of  this  class  are: 

1.  A  short  apprenticeship  makes  the  man  valuable  to  the 
employer. 

2.  The  employee  with  his  limited  capacity  feels  his  de- 
pendence on  the  employer,  and  is  likely  to  be  a  faithful  and 
attentive  workman  because  he  receives  a  larger  income  than 
the  ordinary  laborer,  and  could  in  most  cases  obtain  employ- 
ment only  as  a  less  valuable  man  in  another  place. 

8.  The  employee  becomes  very  dexterous  in  doing  one 
thing,  and  is  thus  able  to  turn  out  a  large  product. 

It  is  possible  to  run  but  few  plants  without  using  more  of 
the  third  class  than  are  readily  available.  They  are  neces- 
sary as  bosses  and  leaders  of  the  first  and  second  groups,  and 
unfortunately  they  cannot  be  developed  rapidly  from  either 
one  of  them.  Shop  managers  find  themselves  seriously  han- 
dicapped, from  time  to  time,  in  getting  men  who  can  take 
charge  of  departments,  who  can  become  gang  bosses  and  fore- 
men in  the  various  divisions  of  the  organizations.  So  im- 
portant has  the  specialization  of  labor  become  that  the  old 
style  apprentice  in  the  shop  has  almost  completely  vanished. 
A  few  weeks  of  practice  enables  a  man  to  run  a  loom,  but  to 
get  a  good  loom  foreman  a  man  should  come  through  an  ap- 
prenticeship which  has  taught  him  every  part  of  the  loom  and 
its  running  mechanism.  It  takes  a  very  short  time  to  learn 
to  run  a  drill  press  or  milling  machine,  but  it  is  an  exceed- 
15 


208    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

ingly  hard  proposition  to  get  a  man  who  can  tell  what  classes 
of  work  should  go  on  the  machines,  how  they  should  be  at- 
tached, how  the  tools  should  be  adjusted,  and  a  hundred  and 
one  other  such  matters.  It  requires  little  intelligence  to 
scrape  in  a  valve  seat,  but  it  requires  skill  to  set  the  valves 
of  the  variety  of  engines  that  come  into  some  of  the  large 
general  shops.  So  pressing  has  the  need  of  this  highly 
skilled  class  of  mechanic 'become  that  in  spite  of  the  profit- 
ableness of  the  second  class,  corporations  now  make  every 
effort  possible  to  encourage  young  men  to  advance  past  the 
mere  routine  of  making  goods.  A  number  of  large  concerns 
are  devoting  a  great  deal  of  attention  to  the  development  and 
teaching  of  apprentices. 

Apprenticeship. — The  General  Electric  Company  of 
Lynn,  Massachusetts,  about  1902  put  into  operation  an  ap- 
prenticeship system  which  has  proven  to  be  beneficial  both 
to  the  firm  and  the  employees.  They  organized  a  special  de- 
partment devoted  entirely  to  the  training  of  apprentices.  This 
department  was  put  under  the  direct  control  of  a  superinten- 
dent, who  was  especially  qualified  to  teach  young  men  the 
principles  of  their  trades.  The  company  also  established 
class  rooms  in  the  factory  in  which  the  boys  are  taught 
drawing,  and  are  given  instruction  in  engineering  science. 
The  training  received  by  a  student  at  Lynn  is  so  broad  "that 
the  graduate  apprentice  is  prepared  to  fill  a  position  as  a 
skilled  journeyman  or  as  industrial  foreman  in  any  mechani- 
cal establishment. ' '  ^ 

The  Baldwin  Locomotive  Works  of  Philadelphia  is  an- 
other well-known  firm  which  has  established  an  apprentice- 
ship system.  They  have  not,  however,  set  apart  a  separate 
school  or  department  for  the  training  of  the  young  men.  A 
learner  goes  into  the  various  shops  and   departments  and 

1  The  Annals  of  the  American  Academy  of  Political  and  Social 
Science,  Vol.  XXXIII,  No.  1,  January,  1909,  p.  143. 


THE   LABOR   FORCE  209 

gathers  knowledge  and  experience  from  things  as  they  actu- 
ally go  on  in  the  usual  course  of  events  in  the  works.  In 
order  to  provide  for  several  classes  of  apprentices  they  have 
made  provision  for  three  classes  of  applicants. 

Apprentices  of  the  First  Class. — The  first  class  includes 
boys  of  seventeen  years  of  age  who  have  had  a  good  common 
school  education,  and  who  bind  themselves  by  indentures 
(with  the  consent  of  a  parent  or  guardian  in  each  case)  to 
serve  four  years ;  to  be  regular  at  their  work ;  to  obey  all  or- 
ders given  them  by  the  foreman  or  others  in  authority;  to 
recognize  the  supervision  of  the  firm  over  their  conduct  out 
of  the  shop  as  well  as  in  it;  and  to  attend  such  night  schools 
during  the  first  three  years  of  their  apprenticeship  as  will 
teach  them,  in  the  first  year,  elementary  algebra  and  geome- 
try; and  in  the  remaining  two  years,  the  rudiments  of  me- 
chanical drawing. 

Apprentices  of  the  8econd  Class. — The  second-class  in- 
denture is  similar  to  that  of  the  first  class,  except  that  the 
apprentice  must  have  had  an  advanced  grammar  school  or 
high-school  training,  including  the  mathematical  courses 
usual  in  such  schools.  .  He  must  bind  himself  to  serve  for 
three  years,  and  to  attend  night  schools  for  the  study  of  me- 
chanical drawing,  at  least  two  years,  unless  he  has  already 
sufficiently  acquired  the  art. 

Appreyitices  of  the  Third  Class. — The  third-class  inden- 
ture is  in  the  form  of  an  agreement  made  with  persons 
twenty-one  years  of  age  or  over,  who  are  graduates  of  col- 
leges, technical  schools,  or  scientific  institutions,  having 
taken  courses  covering  the  higher  mathematics  and  the  nat- 
ural sciences,  and  who  desire  to  secure  instruction  in  practi- 
cal shop  work. 

The  indenture  or  agreement  in  each  case  obligates  the 
company  to  teach  the  apprentice  his  art  thoroughly  and  to 
furnish  him  opportunity  to  acquire  a  practical  knowledge  of 
mechanical  business.     The  firm  is  also  bound  to  retain  the 


212    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

While  they  are  serving  their  time  an  exact  record  is  kept 
of  their  conduct  and  performance  within  the  plant;  and,  if 
they  are  trade  apprentices,  their  outside  night  school  work  is 
carefully  graded  and  recorded.  They  are  marked  for  work- 
manship, personality,  and  outside  class  work.  A  young  man 
has  an  incentive  to  do  his  best  in  every  department ;  because, 
if  at  any  time  he  becomes  incompetent  through  neglecting 
his  work  or  studies,  or  is  insubordinate,  he  is  liable  to  dis- 
missal. Dismissal  means  he  loses  both  a  job  and  a  chance 
to  better  his  future  condition.  If  he  honorably  completes  the 
term  of  service,  the  firm  in  the  case  of  trade  apprentices  pre- 
sents a  substantial  reward  in  the  form  of  $100  and  a  diploma, 
which  tells  the  world  that  he  is  competent  to  follow  some 
definite  line  of  work.  The  engineering  apprentices  receive 
no  gratuity,  but  obtain  certificates. 

Nothing  so  clearly  indicates  our  progress  both  in  the  in- 
dustrial and  educational  fields  as  do  these  highly  organized 
apprenticeship  systems.  This  development  has  taken  place 
within  the  last  ten  years.  Indeed  it  is  not  that  long  since 
apprentices  in  some  places  were  started  in  at  $2  per  week, 
and  raised  a  dollar  or  so  every  year  until  they  were  earning 
a  weekly  wage  of  $6  by  the  time  their  terms  expired.  In 
the  older  shops,  his  training  depended  very  largely  upon  the 
caprice  of  his  foreman  and  his  own  assertiveness.  If  he  were 
wide  awake  and  insistent  upon  getting  acquainted  with  all 
classes  of  work  which  went  on  in  the  shop,  he  would  get  a 
good  training.  If,  however,  he  were  not  a  favorite  or  a  for- 
ward kind  of  youngster  he  would  frequently  secure  a  poor 
training  for  a  future  career. 

The  writer  knows  of  one  plant  which  still  has  the  old  style 
of  apprenticeship  contract,  and  the  trouble  it  has  had  to  find 
competent  foremen,  gang  bosses,  and  workmen  is  evidence 
that  a  far-sighted,  generous  policy  is  the  most  profitable. 

Individual  Ability. — No  firm  can  hope  to  be  successful 
if  it  is  dependent  upon  unusual  ability  of  any  considerable 


THE   LABOR   FORCE  218 

portion  of  its  workers.  A  large  number  of  firms  whose  work 
is  of  such  a  nature  that  a  formal  system  of  indenture  is  inad- 
visable or  impossible  have  adopted  the  policy  of  supplying 
an  understudy  of  some  kind  to  every  man  who  has  charge  of 
a  department  containing  a  number  of  men.  This  assistant 
or  helper  is  expected  to  acquaint  himself  with  all  the  duties 
of  his  chief,  and  is  supposed  to  act  in  his  absence.  In  this 
way  the  plant  is  never  at  a  loss  to  fill  any  position  which 
may  be  vacated  in  any  department.  One  large  organization 
engaging  some  40,000  employees  will  not  promote  one  from 
a  lower  to  a  higher  position  unless  that  same  man  has  trained 
a  subordinate  to  fdl  his  position.  This  insures  to  the  firm 
available  workers  for  every  possible  position,  and  it  also  has 
a  tendency  to  develop  a  very  friendly  feeling  between  the 
heads  of  departments  and  their  assistants,  because  the  de- 
partmental head  sees  that  it  is  to  his  distinct  interest  to  have 
capable  subordinates. 

Another  firm  takes  the  attitude  of  fearing  the  coming 
man.  Every  foreman  or  division  head  likes  to  impress  all  of 
the  superior  officers  with  the  idea  that,  if  he  leaves,  the  de- 
partment will  suffer.  In  a  measure  he  speaks  the  truth,  be- 
cause those  individuals  take  care  to  have  subordinates  who 
possess  few  of  the  larger  qualities  needed  by  men  of  initia- 
tive. The  firm  as  a  consequence  is  terribly  handicapped,  and 
as  is  to  be  expected,  the  work  in  the  departments  is  so 
unsatisfactorily  performed  that  every  few  years  there  is  a 
general  "shake-up"  in  the  plant,  entailing  the  resignation 
and  dismissal  of  a  large  number  of  the  dejmrtmental  heads. 
Thus  the  short-sighted  policy  pursued  by  every  one  in  the 
plant  to  hold  his  job  is  the  very  thing  that  is  hindering  his 
personal  advancement  and  the  general  prosperity  of  the  firm. 
This  concern  has  not  paid  a  dividend  on  its  stock  for  more 
than  a  half  dozen  years,  while  the  former  company's  stock 
has  averaged  7  per  cent  for  a  generation. 


CHAPTER  XV 

THE  PAYMENT  OF  THE  WORKMAN 

In  order  to  get  the  maximum  product  from  any  set  of 
employees,  the  manager  must  consider: 

1.  The  best  methods  of  keeping  the  men  employed  at 
their  maximum  limit  while  within  the  plant. 

2.  The  best  methods  of  making  their  work  accurate. 
When  one  establishes  a  wage  scale  he  should  have  those 

two  objects  in  mind. 

The  greatest  incentive  a  man  can  have  to  work  faithfully 
is  to  be  paid  according  to  some  scheme  whereby  his  remu- 
neration is  directly  proportional  to  his  output.  How  to  estab- 
lish a  wage  scale  which  will  yield  this  maximum  output  for 
a  minimum  wage  cost  is  a  problem  that  has  troubled  man- 
agers for  years. 

The  oldest  scheme  of  wage  payment  is  to  pay  the  worker 
a  certain  fixed  sum  for  the  time  he  is  employed  in  the  plant. 
In  the  hands  of  a  vigorous  overseer  thoroughly  conversant 
with  all  the  work  in  the  plant,  the  time  system  proves  satis- 
factory provided  the  plant  is  so  small  that  the  foreman  in 
charge  can  keep  in  constant  touch  with  all  that  is  going  on. 
From  the  employer's  point  of  view  it  might  appear  that 
nothing  can  be  more  perfect  than  the  time  system  of  wage 
payment;  because  every  increase  in  output  that  the  man 
makes  means  an  absolute  gain  to  the  owner  of  the  plant. 
The  curves  A  A^  in  Fig.  24  show  how  increased  exertion 
contributes  to  the  profits  of  the  firm;  the  employee  gets  the 
same  compensation  whether  he  does  one  piece  or  a  hundred, 
while  the  employer  can  *see  with  glowing  satisfaction  his 
wage  cost  per  unit  dropping  downward.     There  is  but  one 

214 


THE  PAYMENT  OF  THE  WORKMAN      215 

difficulty  with  which  the  employer  must  contend  in  this  re- 
munerative scheme.  The  employee  will  not  give  his  best 
efforts  so  long  as  added  exertions  do  not  bring  immediate 
returns.  The  only  tangible  encouragement  a  man  has  in  the 
time  system  is  that  his  rate  of  pay  will  be  increased  from 
time  to  time  as  he  demonstrates  his  worth.  In  a  large  shop 
it  is  impossible  for  a  foreman  to  be  in  such  intimate  contact 
with  all  the  men  that  he  can  make  wage  adjustments  that 
will  be  strictly  fair  to  each  individual.  It  is  hard  to  measure 
the  efficiency  of  a  man  by  his  general  attitude  or  by  his  talk. 
Some  of  the  best  talkers  and  apparently  most  industrious 
workers  may  be  confirmed  loafers  and  the  least  efficient  men 
in  the  firm's  employ. 

The  only  practicable  way  of  establishing  a  satisfactory 
time-rate  system  is  to  divide  the  men  into  groups  or  classes 
and  fix  a  maximum  and  minimum  rate  for  these  classes.  If 
a  man  is  valuable  he  may  get  his  wages  raised  to  the  maxi- 
mum within  the  class,  or  he  may  be  advanced  to  another 
class.  The  wages  are  fixed  by  bargain  between  the  men  and 
the  employer.  This  bargaining  may  be  done  either  collec- 
tively at  the  dictation  of  a  labor  union,  which  fixes  mini- 
mum wage  rates,  or  it  may  be  done  by  the  individual  work- 
men fixing  their  wages  with  the  foreman.  At  best,  the  wage 
adjustment  is  largely  guesswork  so  far  as  rewarding  individ- 
ual men  for  what  they  do. 

Unless  there  is  some  means  of  measuring  what  a  man 
does,  it  is  unsafe  to  depend  upon  personal  likes  and  dislikes. 
Here  lies  the  inherent  weakness  of  the  time-rate  system.  A 
foreman  will  often  raise  wages  not  because  a  man  actually 
produces  more,  but  because  he  thinks  the  man  more  efficient. 
Managers  in  plants  have  long  appreciated  the  fact  that  there 
should  be  a  different  method  of  fixing  standards  of  wage 
payment  than  on  the  basis  of  personal  conjecture. 

The  average  man  is  not  inclined  to  overexertion.  Fre- 
quently his  chief  aim  seems  to  be  to  do  the  least  amount  of 


216    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

work  necessary  to  keep  from  getting  discharged  or  being  re- 
duced in  pay.  Foremen  are  much  annoyed  and  firms  lose 
thousands  of  dollars  through  the  idleness  of  men  from  one 
cause  or  another.  A  great  deal  of  this  lack  of  energy  on  the 
part  of  the  men  is  not  due  to  wilful  idleness  but  to  oversight 
on  the  part  of  the  foremen.  Men  will  frequently  get  a  job 
completed  and  wait  with  perfect  complacency  until  the  fore- 
man comes  to  them  with  another  task.  In  some  poorly  run 
shops  men  waste  as  much  as  half  a  day  waiting  for  the  fore- 
man to  find  out  that  they  are  ready  for  a  new  job.  There  are 
also  other  kinds  of  time  losses.  Men  will  frequently  wilfully 
kill  time  in  order  to  make  work  last.  Machines  will  not  be 
run  to  their  maximum  capacity  because  to  do  so  will  finish  a 
job  so  long  before  quitting  time  that  it  will  be  necessary  to 
lift  off  the  piece  and  adjust  another  about  the  time  the  whistle 
blows.  One  will  sometimes  see  men  in  day-rate  shops  actu- 
ally make  their  machines  run  without  doing  anything  at  all 
in  order  to  appear  to  be  working  and  so  do  away  with  the  ne- 
cessity of  changing  a  job  at  some  inconvenient  time.  Man- 
agers of  plants  are  not  ignorant  of  these  conditions.  The 
wilful  dishonesty  and  lack  of  willing  cooperation  on  the  part 
of  the  employees  have  made  the  daily  wage  system  a  poor 
means  of  remuneration  for  many  kinds  of  work.  Wide-awake 
men  rightly  reason  that  if  a  scheme  could  be  devised  by 
which  workmen  lose  money  for  idle  time,  they  would  not  be 
so  inclined  to  sit  with  bovine  patience  until  their  foreman 
finds  them  out  of  work  and  starts  them  on  another  task, 
neither  would  they  be  apt  to  waste  time  wilfully  in  order  to 
start  new  work  at  a  more  convenient  season  or  to  save  a  job 
when  work  is  getting  low  in  the  shop. 

It  is  rational  to  assume  that  the  remuneration  for  labor 
should  be  on  the  basis  of  all  ordinary  commercial  transac- 
tions, that  the  man  should  be  paid  for  what  he  does,  that 
compensation  should  be  by  the  piece-rate  system.  There  can 
be  no  more  effective  way  to  prevent  idleness,  because  the 


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24.— Comparison  of  the  Time-Rate  and  Piece-Rate  Systems. 


218    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

idler  is  fully  as  much  a  loser  as  the  firm.  Viewed  from  the 
workman's  standpoint,  there  can  be  no  more  profitable  means 
of  remuneration.  Fig.  24,  on  lines  BB^  shows  that  on  the 
piece-rate  system  of  wage  payment  a  man  automatically 
raises  his  hourly  rate  by  increasing  the  output.  The  firm 
apparently  does  not  gain  directly  from  the  increased  effort, 
as  is  shown  by  the  fact  that  the  wage  cost  per  piece  is  a  con- 
stant quantity.  (See  lines  B'  B' ^  Fig.  24. )  From  the  dia- 
gram one  would  conclude  that  the  piece-rate  system  of  wage 
payment  would  be  a  system  strongly  advocated  by  the  work- 
man. The  opponents  of  the  piece-rate  system  are  not  the 
employers,  but  the  men.  Their  opposition  is  based  upon 
good  reason,  and  yet,  from  the  employer's  point  of  view,  it 
is  almost  impossible  to  eliminate  the  objection.  To  fix  piece 
rates  one  must  be  guided  by  the  capabilities  of  the  em- 
ployees. When  managers  introduce  the  scheme  they  try  to 
be  fair  to  the  men  and  estimate  the  time  it  will  take  to  per- 
form certain  tasks  on  the  basis  of  previous  time  records  made 
by  men  employed  on  the  day-rate  system.  These  records  are 
from  the  very  nature  of  the  case  inaccurate,  and  it  is  found 
invariably  that  nearly  every  one  underestimates  the  work- 
man's efficiency  when  he  has  an  incentive  so  great  as  that 
offered  by  the  piece-rate  system.  In  some  cases  the  output 
of  the  workman  will  increase  seven  and  eight  times  his  esti- 
mated maximum. 

Under  these  conditions  the  manufacturer  finds  he  is  often 
paying  extravagant  prices  for  labor  which  is  either  unskilled 
or  semi-skilled  in  type.  In  these  competitive  days,  he  can- 
not afford  to  pay  exorbitant  daily  wages  to  men  whose  train- 
ing is  of  a  low  order,  because  his  competitors  will  soon  adopt 
a  daily  wage  or  a  piece-rate  schedule  of  a  very  much  lower 
wage  standard.  The  result  is  that  the  piece-rate  system  of 
wage  payment  in  industries,  which  have  not  been  thoroughly 
standardized  and  developed,  has  been  found  exceedingly  un- 
satisfactory, because  the  workmen  consider  it  unfair  to  cut 


THE  PAYMENT  OF  THE  WORKMAN      219 

their  rates,  and  the  managers  find  it  almost  impossible  to 
establish  a  rating  which  will  be  satisfactory  to  themselves 
and  to  the  employees  without  considerable  adjustment. 

The  breakdown  of  the  piece-rate  system  is  due  to  the  fact 
that  it  is  impossible  to  adjust  rates  without  friction.  The 
men  consider  every  reduction  of  the  piece  rate  an  illustration 
of  the  employers'  greed,  while  the  employers  feel  that  the  in- 
creased output  is  another  example  of  how  grossly  employees 
have  deceived  them  in  the  past  in  order  to  mislead  them  into 
paying  excessive  wages.     Both  sides  feel  disgruntled. 

Employers  who  have  experimented  with  this  system  and 
have  discovered  the  skill  a  laborer  possesses,  have  endeavored 
to  apply  the  theory  of  giving  a  large  incentive  to  some  one 
who  can  guide  and  direct  the  men  and  yet  pay  these  workers 
a  day  rate.  There  are  plants  in  this  country  which  apply 
this  scheme,  and  call  it  the  Contract  System.  The  foremen 
in  charge  are  given  a  certain  price  for  the  work  they  do,  they 
hire  and  direct  the  men,  usually  paying  them  on  a  day  basis, 
and  fixing  their  wages  at  the  lowest  possible  point  the  men 
will  agree  to  take.  Under  the  contract  system  of  working, 
the  foremen  have  their  income  based  upon  the  work  they  can 
get  from  these  men.  The  scheme  has  a  tendency  to  develop 
a  body  of  alert  overseers  who  are  always  after  the  men  to  see 
that  they  are  not  wasting  time  either  through  laziness  or  by 
incompetence.  The  system  when  it  operates  makes  men 
work,  but  it  has  the  unpleasant  disadvantage  of  developing 
slave-driving  habits.  Many  men  will  not  stand  for  such 
treatment;  and  unless  the  work  is  of  such  a  nature  that  a 
rather  low  type  of  worker  can  be  employed  and  taught  the 
tasks  to  be  done,  the  company  is  liable  to  have  a  great  deal 
of  trouble  with  its  labor  under  this  contract  system,  although 
in  some  plants  it  has  worked  successfully  for  many  years. 

Mr.  Henry  R.  Towne,  a  number  of  years  ago,  conceived  a 
scheme  which  has  had  a  profound  influence  upon  pay  sys- 
tems, because  he  introduced  an  incentive  rather  than  a  coer- 


220    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

cive  process  to  get  men  to  increase  their  exertions.^  His 
scheme  is  briefly  this — find  out  what  has  been  the  average 
cost  for  a  given  amount  of  output  in  the  best  year  before  he 
introduced  the  system.  With  this  as  a  unit  he  determines 
what  the  labor  cost  for  the  same  quantity  has  been  for  each 
succeeding  year.  The  difference  in  labor  cost  between  the 
two  gives  him  the  savings  made  for  the  firm  by  the  extra 
effort  of  the  labor  force.  This  saving  he  distributes  in  the 
following  way:  50  per  cent  is  retained  by  the  firm,  10  per 
cent  is  given  to  the  foremen  in  charge  of  the  work  as  an 
inducement  to  them  to  get  men  to  increase  output,  40  per 
cent  he  distributes  to  the  gang  bosses  and  workmen  through- 
out the  plant  on  the  basis  of  their  annual  wages.  The  re- 
muneration is  given  at  the  end  of  the  year  or  at  the  end  of 
some  considerable  length  of  time  shorter  than  a  year. 

This  sharing  of  the  gain  with  the  men  has  in  it  a  num- 
ber of  defects,  the  most  important  of  which  are : 

1.  The  reward  is  remote. 

2.  The  method  of  division  is  not  likely  to  encourage  great 
activity  because  the  men  do  not  receive  shares  in  proportion 
to  their  individual  efforts. 

Some  writers  have  criticised  the  system,  because  it  makes 
the  men  share  gains  which  they  say  may  be  due  to  improved 
methods  of  work  or  to  better  management.  There  may  be 
some  basis  for  this  statement,  but  Mr.  Towne's  paper  dis- 
tinctly stipulates  that  the  books  shall  be  so  kept  that  any 
improvements  in  management  will  not  be  shared  by  the 
workmen  save  in  so  far  as  they  actively  assist  in  the  work. 
The  paper  specifically  notes  that  it  is  only  fair  to  share  with 
the  operatives  the  savings  which  their  activity  makes  for  the 
firm. 

The  remoteness  of  the  reward  and  the  method  of  division 


1  Transactions  American  Society  of  Mechanical  Engineers,  Vol, 
X,  p.  600,  No.  341,  "Gain  Sharing,"  by  Henry  R.  Towne. 


THE  PAYMENT  OF  THE  WORKMAN      221 

are,  however,  serious  objections,  and  these  Mr.  F.  A.  Halsey 
circumvented  when  he  presented  the  premium  plan  of  remu- 
nerating labor.'  Mr.  Halsey  believed  with  Mr.  Towne  that 
the  workman  should  be  rewarded  only  in  so  far  as  his  actions 
lower  production  costs.  He,  however,  appreciates  the  fact 
that  a  much  better  incentive  will  be  given  to  men  if  they  are 
paid  at  once  their  exact  share  of  all  the  profit  they  make. 
His  scheme  is  briefly  this : 

A  man  is  given  a  certain  rate  per  hour.  A  piece  of  work 
is  assigned  to  him  which  will  be  allowed  a  certain  number  of 
hours  time  in  which  to  be  done.  If  the  man  performs  the 
work  in  a  shorter  time,  he  will  be  given  a  fixed  percentage  of 
the  value  of  the  time  saved.  This  extra  sum  will  be  paid  to 
him  as  a  premium  to  his  wages,  and  on  that  account  the 
Halsey  scheme  is  called  the  Premium  Plan  of  Remunerating 
Labor.  The  idea  of  the  scheme  is  to  establish  the  shop  on  a 
piece-rate  system,  in  which  the  men  will  be  guaranteed  a 
certain  daily  wage.  If  the  management  has  fixed  the  price 
of  the  unit  of  work  performed  at  too  high  a  figure  the  work- 
man will  share  his  extra  productive  value  with  the  manufac- 
turer in  a  manner  that  Avill  not  require  the  cutting  of  the 
rate.  In  a  word,  by  dividing  the  gains  due  to  his  extra  pro- 
ductivity, both  the  manufacturer  and  the  worker  profit,  and 
the  worker  will  have  no  reason  to  limit  his  output  because 
there  will  be  no  rate  cutting. 

The  lines  A  A,  Fig.  25,  show  how  by  this  system  a  man 
■increases  his  hourly  wage  in  a  very  material  way  by  increas- 
ing his  productivity.  At  the  same  time  he  cuts  the  unit 
price  per  piece  considerably  for  the  firm.  (See  lines  A'A\ 
Fig.  26. )  The  figure  shows  just  how  Mr.  Halsey  manages 
to  make  unnecessary  any  cuts  in  the  unit  rate.     By  his  sys- 


1  Transactions  American  Society  of  Mechanical  Engineers,  Vol. 
Xn,  p.  755,  "Premium  Plan  of  Paying  for  Labor,"  by  F.  A. 
Halsey. 


222    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

tern,  the  workman  by  increasing  his  wages  actually  cuts  the 
cost  of  production.  His  only  method  of  obtaining  a  big 
reward  is  to  cut  the  unit  cost.  Thus  the  employer  has  a 
decided  advantage.  If  we  look  at  the  other  term  of  the  con- 
tract we  find  that  the  workman  is  guaranteed  a  standard  daily 
wage,  so  that  he  can  feel  that  he  is  not  on  the  piece-rate  sys- 


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tem.  If  the  price  per  unit  has  been  set  too  low,  he  is  not 
compelled  to  overexert  himself  in  order  to  make  a  fair  daily 
wage. 

The  advantages  of  the  Halsey  system  are: 

1.  The  men  are  encouraged  to  produce  more  by  being 
rewarded  in  proportion  to  what  they  do. 


THE  PAYMENT  OF  THE  WORKMAN      223 

2.  The  reward  is  immediate  and  substantial. 

3.  The  employer,  in  sharing  the  gains  of  the  extra  exer- 
tion on  the  part  of  the  worker,  does  not  have  the  necessity  of 
cutting  the  rate  in  an  arbitrary  manner,  hence  the  workman's 
mind  is  relieved  of  the  fear  of  having  his  wages  reduced 
arbitrarily. 

A  British  modification  of  the  system  was  put  into  opera- 
tion by  David  Rowan  &  Company.  Mr.  Rowan's  wage 
curve  is  plotted  B  B  on  the  same  diagram  (Fig.  25) ,  which 
shows  Mr.  Halsey's  premium  plan,  while  the  Rowan  piece 
cost  is  shown  as  line  B'  B'  on  the  same  diagram.  Accord- 
ing to  Mr.  Rowan's  idea,  if  a  job  has  been  allotted  too  much 
time,  even  with  the  Halsey  system,  a  man  may  get  a  remu- 
neration out  of  all  proportion  to  the  value  of  the  work.  For 
example,  if  a  man  should  be  allotted  one  hour  to  do  a  piece 
of  work  worth  30  cents,  and  if  he  should  increase  his  pro- 
ductivity ten  times,  with  the  Halsey  system  he  would  get 
$1.20  an  hour.  This  is  considerably  better  for  the  firm  than 
his  hourly  rate  would  be  with  straight  piece  work.  The  lat- 
ter cost  would  be  $3  an  hour.  (See  Fig.  25.)  Mr.  Rowan 
believes,  however,  that  even  Mr.  Halsey's  scheme  is  too 
extravagant  in  its  reward,  so  he  devised  a  plan  of  so  adjust- 
ing the  premium  that  every  increase  in  wages  should  be  equal 
to  the  percentage  the  operator  saves  on  the  time.  For  ex- 
ample, if  a  job  is  allotted  one  hundred  hours  and  the  man's 
rate  is  30  cents  per  hour,  the  cost  of  the  work  would  be  $30. 
If  he  does  the  job  in  ninety  hours,  with  his  hour  rate  30 
cents,  the  time  wages  on  the  job  would  be  $27.  He  has 
saved,  however,  10  per  cent  of  the  time,  and  gets  a  10-per- 
cent increase  in  wages  on  the  actual  time  cost.  Should  ht 
do  the  work  in  eighty  hours,  the  time  rate  would  be  $24. 
Twenty  per  cent  time  saved  on  $24,  the  time  cost,  would  be 
$4.80.  A  comparison  of  the  two  tables  will  show  the  wage 
scale  (wages  rate  30  cents  per  hour)  as  worked  out  by  the 
Halsey  and  the  Rowan  methods. 
16 


•224    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 


COMPARISON  OF   DIFFERENT   METHODS   OF  CALCU- 
LATING  PREMIUMS.! 

Halsey-s  Method. 


Hours 
Allowed. 

Hours 
Taken. 

iTime  Wages 
on  Job. 

Premium 
Earned 
on  Job. 

Total  Labor 
Cost. 

Workman's 

Rate  per 

Hour. 

100 

100 

$30.00 

$0.00 

$30.00 

$0.30 

100 

90 

27.00 

1.00 

28.00 

.311 

100 

80 

24.00 

2.00 

26.00 

.325 

100 

70 

21.00 

3.00 

24.00 

.343 

100 

60 

18.00 

4.00 

22.00 

.366 

100 

50 

15.00 

5.00 

20.00 

.40 

100 

40 

12.00 

6.00 

18.00 

.45 

100 

30 

9.00 

7.00 

16.00 

.533 

100 

20 

6.00 

8.00 

14.00 

.70 

100 

10 

3.00 

9.00 

12.00 

1.20 

100 

1 

.30 

9.90 

10.20 

10.20 

Rowan's  Method. 


Hours 

Hours 

Time  Wages 

Premium 
Earned 
on  Job. 

Total  Labor 

Workman's 

Rate  per 

Hour. 

Allowed. 

Taken. 

on  Job. 

Cost. 

100 

100 

$30.00 

$0.00 

$30.00 

$0.30 

100 

90 

27.00 

2.70 

29.70 

.33 

100 

80 

24.00 

4.80 

28.80 

.36 

100 

70 

21.00 

6.30 

27.30 

.39 

100 

60 

18.00 

7.20 

25.20 

.42 

100 

50 

15.00 

7.50 

22.50 

.45 

100 

40 

12.00 

7.20 

19.20 

.48 

100 

30 

9.00 

6.30 

15.30 

.51 

100 

20 

6.00 

4.80 

10.80 

.54 

100 

10 

3.00 

2.70 

5.70 

.57 

100 

1 

.30 

.297 

.597 

.597 

The  reader  will  observe  that  while  the  Rowan  plan  com- 
pared with  the  Halsey  method  does  prevent  excessive  earn- 
ings on  the  part  of  the  employee  when  he  multiplies  his 
output  many  times,  it  on  the  other  hand  gives  a  decidedly 

1  "Trade  Unionism  and  Labor  Problems/' by  John  R.  Com- 
mons, p.  287. 


THE  PAYMENT  OF  THE  WORKMAN      225 

greater  reward  to  the  workman  until  he  more  than  doubles 
his  productive  capacity.  Is  this  a  desirable  characteristic 
of  a  wage  system?  Does  not  the  Rowan  Premium  tend  to 
encourage  the  workmen  to  remain  at  a  lower  level  of  effici- 
ency than  the  Halsey  Premium?  To  be  perfectly  fair  to  Mr. 
Rowan,  it  should  be  stated  that  his  rate  is  adjusted  for  the 
purpose  of  making  special  cuts  unnecessary.  If  a  man  loiters 
about  his  work  when  the  rate  is  being  set,  he  cannot  reap  too 
great  a  harvest  by  ' '  rushing. ' '  The  scheme  certainly  does 
act  automatically  in  reducing  output  cost,  but  it  seems  highly 
probable  to  the  writer  that  men  who  work  under  it  would  be 
somewhat  inclined  to  "nurse"  their  jobs  when  they  found 
that  their  added  exertions  increased  their  wages  so  slightly 
as  the  system  does  in  the  later  stages. 

In  1895,  Mr.  Fred  W.  Taylor  read  a  paper  before  the 
American  Society  of  Mechanical  Engineers,  in  which  he 
recognized  the  advantages  of  the  Halsey  system  and  its  su- 
periority over  any  previously  proposed  scheme,  but  pointed 
out  that  it  has  one  very  grave  defect — while  it  encourages  the 
workman  to  do  good  work,  it  gives  only  a  passive  incentive 
by  not  punishing  him  for  not  doing  his  best.  In  other 
words,  the  Halsey  system  permits  men  to  gather  premium 
for  work  done,  but  it  does  not  necessarily  stimulate  a  man 
to  produce  his  utmost.  In  order  to  introduce  this  element, 
Mr.  Taylor  proposed  a  scheme  of  wage  payment  which  both 
punishes  and  rewards,  and  which  he  calls  the  differential 
piece-rate  system.  According  to  this  plan,  a  man  is  rewarded 
only  after  he  attains  a  certain  fixed  standard  of  work.  If  he 
does  not  accomplish  the  job  in  a  given  time,  instead  of  being 
paid  an  ordinary  piece-rate  price,  he  is  paid  a  piece-rate 
price  considerably  lower  than  the  one  paid  if  he  does  the 
work  within  the  stipulated  period. 

If  the  usual  output  of  a  80-cent-an-hour  man  in  an  ordi- 
nary shop  is  one  piece  in  an  hour,  Mr.  Taylor  would  by  his 
timing  process  find  that  an  individual  working  at  his  maxi- 


226    THE  PRINCIPLES  OP  INDUSTRIAL  MANAGEMENT 

mum  rate  on  every  part  of  the  job  could  accomplish  three 
pieces  in  an  hour.  He  would  then  fix  his  rate  as  follows: 
Three  pieces  in  an  hour  would  be  made  the  standard.  If  a 
man  could  perform  three  pieces  an  hour  he  would  get,  not  as 
he  would  get  in  the  day-rate  shop,  thirty  cents  an  hour,  or 
ten  cents  a  piece,  but  fifteen  cents  a  piece,  or  some  similar 
amount,  for  each  piece  performed,  so  that  his  hourly  rate,  if 


ISO 

135 


IZO 


los 


90 
7S 


eo 


4S 


30 


IS 


A 

f 

-?1 

f 

.A 

i' 

/ 

,^' 

c< 

^^7- 

F»£ 

LE 

P^f^ 

- 

^^ 

8 
5: 

Of 
Ui 

60  a. 
3o0 


IS 


9      lo 


-^    Pieces     PE»^  >^O0T^    ^^ 

Fig.  26.— Taylor  Differential  Piece-Rate  System. 

he  reached  three  pieces  in  an  hour,  would  be  forty-five  cents. 
If  he  performed  more  than  three  pieces  in  an  hour,  say  four 
or  five,  he  would  still  get  15  cents  a  piece  for  every  one  per- 
formed, so  that  the  workman,  as  shown  by  Fig.  26,  would 
raise  his  wages  by  a  fixed  amount  for  every  piece  finished. 
If,  however,  he  could  not  make  three  pieces  within  the  allot- 
ted time,  he  would  not  get  15  cents  a  piece,  or  even  10  cents 
a  piece.     He  may  be  given  but  8  cents  for  every  piece  made 


THE  PAYMENT  OF  THE  WORKMAN      227 

below  three  pieces.  With  such  a  scheme  one  can  easily  see 
that  it  is  very  important  indeed,  from  the  workman's  point 
of  view,  to  perform  a  large  amount  of  work  in  a  day. 

This  plan  of  reward  differs  from  any  of  the  others  in 
another  essential,  aside  from  the  differential  piece-rate  idea, 
viz. :  The  time  allowed  to  do  the  job  is  very  accurately  deter- 
mined. The  superintendents  of  the  works  make  a  careful 
study  of  the  exact  time  it  needs  to  take  to  do  the  jobs,  work- 
ing in  the  quickest  known  way,  and  the  workmen  are  allowed 
a  period  just  sufficient  to  permit  them  to  perform  the  task  in 
the  most  approved  fashion  in  which  it  can  be  done.  Thus 
there  are  two  ideas  involved  in  Mr.  Taylor's  differential 
piece-rate  system:  (1)  a  punishment  for  one  who  does  not 
perform  the  task,  and  a  reward  for  the  one  who  does,  which 
is  the  method  of  payment  idea;  and  (2)  the  workman  has 
accurately  determined  for  him  by  his  superiors  the  time  it 
should  take  to  do  the  work.  In  a  subsequent  paper  entitled 
"Shop  Management,"^  Mr.  Taylor  discusses  in  detail  his 
method  of  ascertaining  the  time  it  should  take  a  workman 
to  perform  his  task.  Every  job  is  divided  into  its  elemen- 
tary operations ;  and  an  attendant,  by  means  of  a  stop  watch, 
observes  the  time  in  minutes  and  seconds  it  takes  a  good 
workman  to  perform  each  part.  The  total  time  of  the  job  is 
then  fixed  by  adding  together  the  time  it  takes  to  accomplish 
all  of  these  elementary  steps.  With  the  time  thus  deter- 
mined, a  task  is  given  which  will  keep  a  good  man  busy  in 
performing,  and  yet  which  is  within  his  j)ossibilities.  Mr. 
Taylor  emphasizes  the  idea  that  the  task  must  be  so  hard 
that  only  a  first-class  man  can  perform  it.  .  He  gives  high 
wages  and  secures  a  low  labor  cost  by  accurately  determining 
the  maximum  possible  output  of  a  workman,  and  compelling 
him  to  reach  that  standard.     He  utilizes  the  hitherto  unre- 

^  Transactions  American  Society  of  Mechanical  Engineers,  Vol. 
XXIV,  pp.  1337-1480. 


228    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

alized  possibilities  of  the  laborer  by  learning  what  those  pos- 
sibilities are,  and  giving  the  reward  only  if  they  are  attained. 

The  Halsey  system,  as  criticised  by  Mr.  Taylor,  is  defec- 
tive, because  it  does  not  give  the  workman  a  definite  goal  to 
reach,  hence  the  high  wage  paid  does  not  reduce  the  output 
cost  as  it  should. 

In  the  America?i  Engineer  and  Railroad  Journal  for 
February  and  December,  1906,  there  appeared  two  articles 


150 


—  Pieces     Pzn    HOUR -- 

Fig.  27.— Emerson  Differential  Piece-Rate  System. 


descriptive  of  the  Santa  Fe's  shop-management  scheme.  The 
first  article  is  entitled,  ' '  Shop  Betterment  and  the  Industrial 
Method  of  Profit  Sharing, ' '  by  Harrington  Emerson.  The 
second  article  is  entitled,  "Betterment  Work  on  the  Santa 
Fe, ' '  written  by  the  staff  writers  of  the  Journal.  These  two 
articles  have  been  the  source  of  much  comment,  and  of  arti- 
cles in  other  magazines.     Mr.  Emerson  has  devised  a  piece- 


THE  PAYMENT   OF  THE  WORKMAN  229 

rate  system,  which  in  many  respects  is  analogous  to  the  Tay- 
lor plan.  He  determines  from  previous  shop  records,  and 
by  a  careful  study  of  the  best  possible  ways  of  performing 
the  work,  how  long  it  should  take  to  do  each  task  as  it  comes 
into  the  shop.  His  scheme  of  remuneration  is,  however, 
different  from  Mr.  Taylor's  as  regards  the  basis  of  payment. 
After  determining  the  minimum  time  it  takes  to  perform  a 
task,  a  man  is  paid  a  fixed  daily  rate  of  say  80  cents  an  hour 
until  he  performs  two  thirds  of  the  standard  task.  If  he 
performs  the  standard  task,  or  100  per  cent,  which  in  our 
illustration  would  be  three  pieces  in  the  hour,  he  is  given  an 
extra  reward  of  one  fifth  of  the  regular  wages  'for  the  opera- 
tion. If  he  performs  more  than  two  thirds  of  the  work,  but 
less  than  the  standard,  he  is  likewise  paid  a  gradually  in- 
creasing bonus,  as  shown  by  curve  ^  ^  on  Fig.  27.  If  the 
workman  can  perform  more  than  three  pieces  in  an  hour,  he 
is  paid  the  high  price  per  piece  for  every  piece  he  makes 
over  the  standard.  The  Emerson  system  differs  from  that  of 
Mr.  Taylor  in  one  respect.  It  is  not  a  piece-rate  system  un- 
til the  man  performs  at  least  two  thirds  of  the  standard  task. 
Between  the  Halsey  system  and  the  differential  piece-rate 
system,  as  developed  by  Messrs.  Taylor  and  Emerson,  there 
is  another  plan  proposed  by  Mr.  H.  L.  Gantt,  called  the 
^' Bonus  System  for  Rewarding  Labor.  "^  Mr.  Gantt 's  scheme 
differs  from  the  differential  system  in  that  it  is  not  a  piece- 
rate  system,  yet  it  is  like  the  Taylor  system,  in  that  it  does 
set  a  definite  task  for  the  person  to  perform.  If  the  individ- 
ual performs  the  task  within  the  given  time,  he  is  paid  his 
regular  hourly  rate  and  a  certain  stipulated  bonus.  Every 
job  is  allotted  a  certain  amount  of  time ;  if  the  man  performs 
the  task  within  this  time,  he  is  given  the  bonus,  and  as  soon 
as  he  finishes  one  job  he  is  given  another,  to  which  he  is  like- 

1  Transactions  American  Society  of  Mechanical  Engineers^  Vol. 
XXIII,  1902,  p.  341. 


230    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

wise  allotted  a  definite  amount  of  time.  The  result  is  that  if 
a  man  in  the  course  of  a  day  doubles  his  output,  he  will  get 
a  day's  wage  plus  the  bonuses,  which  are  attached  to  the 
separate  jobs  he  has  performed.  If  he  fails  to  do  the  work 
within  the  allotted  time,  he  gets  only  his  day's  wage. 

As  a  matter  of  fact,  it  makes  very  little  difference  which 
system  of  wage  payment  is  used.  There  is  no  reason  why 
the  Halsey  system  need  be  a  "drifting"  S3^stem,  as  termed 
by  Taylor.  The  thing  that  makes  the  differential  piece-rate 
system  effective  is  that  the  manager  of  the  shop  determines 
the  time  that  should  be  taken  to  do  the  work,  and  fixes  his 
differential  rate  accordingly.  Should  the  manager  of  the 
plant,  where  the  premium  system  is  applied,  take  the  same 
means  to  determine  the  minimum  working  time,  the  premium 
system  could  be  adjusted  equally  well.  There  are  shops  which 
have  tried  both  the  premium  and  the  differential  piece-rate 
systems;  and,  after  giving  both  a  fair  trial  extending  over 
many  months,  found  the  premium  plan  considerably  more 
satisfactory.  On  the  other  hand,  there  are  shops  which  have 
ultimately  decided  upon  the  differential  piece-rate  system. 
Indeed,  the  method  of  payment  is  not  so  important,  if  the 
concern  can  find  a  scheme  that  will  justly  determine  the 
possibilities  of  a  worker.  The  system  of  wage  payment  for 
this  purpose  is  a  secondary  matter.  The  method  of  obtain- 
ing the  possible  speed  at  which  a  worker  can  produce  is  the 
real  problem  of  management,  and  the  real  object  of  all  wage- 
payment  systems  should  be  to  reward  him  in  such  a  manner 
that  he  will  produce  this  maximum. 

Mr.  Taylor  suggests  his  unit-time  study  method  to  obtain 
the  speed  possibilities  of  the  man;  Mr.  Halsey  gets  his  data 
by  studying  shop  records  and  carefully  observing  the  men. 
Both  schemes  have  produced  good  results  under  different  con- 
ditions. Generally  speaking,  the  unit-time  study  system  is 
successful  in  shops  which  handle  contracts  of  a  more  or  less 
unvarying  character,  and  are  not  compelled  to  follow  exact- 


THE  PAYMENT  OF  THE  WORKMAN      281 

ing  requirements.  In  one  shop  of  a  miscellaneous  type  which 
handled  work  that  had  to  be  exceedingly  accurate,  the  unit- 
time  study  system^  after  a  fair  trial  extending  over  many 
months,  proved  a  most  dismal  failure.  When  men  tried  to 
make  the  calculated  time,  they  spoiled  the  work.  In  another 
shop  it  has  proven  successful,  yet  the  same  man  who  made 
it  a  success  in  the  one  shop,  failed  to  make  it  a  success  in 
the  other,  and  he  had  the  cooperation  of  the  management  in 
both  cases.  The  cause  of  the  failure  in  the  one  shop  was  the 
exacting  type  of  the  work,  and  in  the  other  the  success  was 
due  to  the  rather  crude  character  of  the  output. 

In  the  shop  where  the  differential  system  failed  the  pre- 
mium system  was  next  tried,  the  time  bein^  predetermined 
by  previous  shop  records,  and  by  keeping  after  the  men;  and 
the  scheme  was  successful,  the  very  scheme  which  Mr.  Tay- 
lor so  severely  condemns. 

In  his  paper,  Mr.  Taylor  emphasizes  one  thing  which 
should  not  be  passed  over  without  some  comment.  He  does 
not  advocate  the  paying  of  high  wages  so  much  as  he  urges 
the  paying  of  wages  which  are  considered  high  by  the  aver- 
age workman  of  the  grade  he  employs.  His  plan  is  to  teach 
a  low-grade  man  to  do  work  which  would  otherwise  be  given 
to  a  highly  skilled  man.  "The  writer"  (Mr.  Taylor)  "goes 
so  far  as  to  say  that  almost  any  job  that  is  repeated  over  and 
over  again,  however  great  skill  and  dexterity  it  may  require, 
providing  there  is  enough  of  it  to  occupy  a  man  throughout 
a  considerable  part  of  the  year,  should  be  done  by  a  trained 
laborer  and  not  by  a  mechanic.  A  man  with  only  the  intel- 
ligence of  an  average  laborer  can  be  taught  to  do  the  most 
difficult  and  delicate  work  if  it  is  repeated  often  enough, 
and  his  lower  mental  caliber  renders  him  more  fit  than  the 
mechanic  to  stand  the  monotony  of  repetition."^ 

1  Transactions  American  Society  of  Mechanical  Engineers^  Vol. 
XXIV,  p.  1347. 


232    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

Care  must  be  taken  not  to  carry  that  policy  too  far. 
There  are  concerns  in  this  country  employing  this  means  to 
have  their  work  performed.  One  plant  has  advertisements 
in  papers  every  once  in  a  while  for  men.  They  employ  a 
high-salaried  man,  who  is  nominally  in  charge  of  a  large  de- 
partment, but  whose  work  is  delegated  to  an  assistant.  The 
chief  of  this  department  spends  so  much  time  getting  people 
that  he  is  not  in  touch  with  the  work  as  he  should  be.  He 
gets  men  at  a  low  price,  and  just  about  the  time  they  are 
trained  they  leave.  The  plant  is  in  a  state  of  unrest  and 
irritation  at  all  times,  due  to  the  fact  that  about  one  third 
of  the  working  force  is  always  just  learning,  and  is  making 
mistakes  that  cause  the  gang  bosses  and  foremen  to  be 
blamed  for  not  looking  after  the  men.  These,  in  turn,  vent 
their  spleen  on  the  man  who  ignorantly  makes  mistakes. 
This  concern,  however,  looks  with  pride  upon  its  average 
wage  rate  per  man,  and  fully  believes  that  it  is  carrying  out 
a  sound  labor  policy.  On  the  contrary,  the  low  average  per 
man  being  paid  for  work  regarded  elsewhere  as  safe  only  in 
the  hands  of  skilled  men  is  costing  the  firm  dearly  in  spoiled 
work. 

In  order  to  determine  the  best  way  to  carry  on  a  plant, 
one  should  not  be  guided  by  any  set  of  opinions  or  by  any 
one  system.  The  manager  should  know  the  men's  records, 
the  amount  of  material  that  is  used  and  wasted,  the  amount 
of  defective  products  returned  by  purchasers,  and  the  per- 
formances of  the  machinery.  These  are  the  things  which  his 
shop  accounting  system  should  tell,  as  the  following  chapters 
will  explain. 


CHAPTER  XVI 
RECORD   OF   THE   WORKERS 

If  the  management  establishes  a  fair  wage  scale,  it  can 
enforce  the  performance  of  good  work  by  discharging  incom- 
petent workers,  because  well-paid  men  want  to  do  good  work 
in  order  to  hold  their  jobs.  If  the  wage  scale  is  unfairly  low 
the  workmen  will  be  able  to  find  better,  or  at  least  as  good, 
employment  elsewhere,  so  that  discharge  is  no  threat  to  com- 
pel good  work  under  these  conditions.  Assuming  a  fair 
wage  scale,  how  can  the  management  enforce  the  performance 
of  accurate  work?  Obviously,  there  is  but  one  way,  and 
that  is  to  punish  the  workmen  who  turn  out  poor  work. 
Good  management  dictates  more  than  a  policy  of  finding  out 
what  each  man  does.  To  have  good  work  turned  out  as  a 
matter  of  course,  is  the  goal  for  which  all , concerns  should 
strive,  and  this  can  be  done  only  by  getting  rid  of  the  poor 
men  and  by  seeing  that  no  incompetent  men  are  re-employed. 
To  keep  good  men,  rewards  must  be  given  either  by  promo- 
tion or  advances  in  wages  from  time  to  time.  To  reward  the 
right  employees,  there  must  be  an  accurate  record  kept  of  the 
men  from  the  time  they  enter  the  plant  until  they  leave  it. 

For  a  small  shop,  a  foreman  can  be  secured  who  may  be 
entrusted  with  determining  the  efficiency  of  the  employees, 
Decause  if  he  is  in  the  habit  of  being  easily  deceived  by  in- 
competent assistants,  the  defect  soon  manifests  itself  to  the 
management.  In  large  plants,  however,  good  foremen  are 
frequently  embarrassed  by  poor  workmen;  and,  many  times, 
poor  workmen,  after  being  discharged  from  one  department, 
find  employment  in  other  departments  until  their  delinquen, 

233 


234    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

cies  are  again  discovered.  If  insufficient  record  is  kept  of 
their  service  in  the  plant,  they  may,  after  a  time,  be  re-em- 
ployed in  the  department  in  which  they  first  demonstrated 
their  inefficiency,  and  even  under  the  original  foreman. 

No  ordinary  person,  having  under  his  constant  guidance 
three  hundred  to  four  hundred  men,  can  keep  in  mind  all 
past  employees.  It  is  not  hard  to  discharge  a  man  if  he  dis- 
plays inefficiency,  but  by  the  time  he  has  proven  his  inca- 
pacity, the  firm  loses  money,  and  the  man  himself  is  being 
done  an  unkindness  by  being  given  even  passive  encourage- 
ment to  work  in  a  field  for  which  he  is  unfitted.  It  is  better 
for  him  to  be  compelled  to  discover  a  place  where  he  will 
be  serviceable,  or  to  find  an  occupation  more  suited  to  his 
ability. 

Some  few  years  ago,  there  was  a  plant  which  did  not  believe 
in  keeping  records  of  its  employees.  The  foreman  hired 
men  whenever  he  needed  help.  In  one  instance,  an  em- 
ployee was  caught  idling  and  was  discharged.  He  lost  half 
a  day,  was  re-employed  in  another  department  the  next  morn- 
ing, and  at  the  end  of  the  week,  in  spite  of  the  lost  time,  he 
received  more  money  for  the  same  work  than  he  would  have 
had  with  his  old  job  under  the  other  foreman.  The  second 
time  he  "soldiered"  as  much  if  not  more  than  the  time 
before,  but  was  circumspect  enough  to  be  employed  Tery 
assiduously  whenever  the  officials  approached  his  vicinity. 

Another  organization  transferred  men  from  one  depart- 
ment to  another  without  ever  recording  such  changes  in  the 
main  office.  A  vacancy  once  occurred  in  a  department  where- 
in a  man  desired  to  be  located,  and  he  asked  permission  to 
change.  The  boss  signified  his  consent  by  saying,  "All 
right,  I'll  send  your  time  to  the  main  office. "  A  week  later 
the  pay  envelope  showed  that  the  man  was  paid  for  working 
in  two  departments  at  the  same  time.  To  cap  the  climax, 
when  he  reported  the  overpay,  he  was  reprimanded  by  his 
former  boss,  who  said,  "You  might  have  kept  quiet  and  not 


RECORD   OF  THE  WORKERS  235 

have  gotten  me  into  trouble.  It  didn't  do  you  any  good  to 
squeal. ' '  And  it  surely  did  not,  for  the  man  was  now  com- 
pelled to  wait  two  weeks  for  his  next  week's  wage,  the  pay- 
master remarking  that  it  took  so  much  time  to  make  the 
correction. 

In  order  to  make  the  foreman  responsible  for  good  work, 
both  in  quality  and  in  quantity,  the  manager  should  take 
pains  to  supply  him  with  efficient  men,  and  to  do  this  he 
should  have  a  working  scheme  that  will  keep  proper  record 
of  the  employees.  In  a  large  concern,  this  can  be  done  to 
best  advantage  by  establishing  a  labor  bureau.  A  small  con- 
cern can  safely  let  the  time  department  keep  a  card-index 
record  of  the  men. 

The  problem  of  the  labor-employing  bureau  may  be 
divided  into  several  parts: 

1.  To  select  and  employ  the  proper  laborers  for  different 
duties. 

2.  To  keep  record  of  the  employees  who  are  still  em- 
ployed, with  their  status  as  workers. 

3.  To  keep  record  of  all  people  who  have  been  employed 
at  any  time  with  reasons  for  their  dismissal  and  their  record 
as  employees. 

The  best  basis  for  good  judgment  is  accurate  knowledge. 
If  an  employer  secures  accurate  knowledge  of  an  applicant 
for  a  place  before  he  hires  him,  he  can  save  himself  much 
trouble  and  some  expense.  There  are  several  things  a  manu- 
facturer should  know  at  once  about  an  employee. 

1.  Has  he  any  constitutional  weaknesses  or  injuries? 

2.  His  approximate  age. 

3.  His  educational  qualifications. 

4.  His  experience. 

The  first  three  can  be  gotten  pretty  accurately  by  combin- 
ing answers  on  the  part  of  the  applicant  with  personal  obser- 
vation. The  fourth  one  is  not  so  easily  determined  by  asking 
questions,  especially  if  the  applicant  is  inclined  to  be  un- 


236    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

tnithfuL  Many  men  apply  for  jobs  for  which  they  are  unfit- 
ted or  have  had  a  very  meager  preparation.  In  one  shop  an 
ex-weaver  secured  a  position  as  a  steamfitter  by  merely 
stating  to  the  hiring  clerk  a  lot  of  hypothetical  experience. 
As  a  matter  of  fact  the  young  man  did  not  know  the  differ- 
ence between  a  pipe-wrench  and  a  pipe-cutter,  but  he  held 
the  job  for  six  months  before  he  made  too  many  blunders. 

The  safest  way  to  determine  a  man's  experience  is  to 
have  him  state  the  names  of  his  former  employers  and  people 
to  whom  one  can  be  referred  who  can  tell  about  his  efficiency 
and  conduct  from  actual  experimental  knowledge. 

Considerable  thought  should  be  put  upon  the  framing  of 
the  questions  on  the  application  blank.  For  instance,  in 
asking  for  the  practical  experience  the  applicant  should  be 
requested  to  state  the  trade  or  occupation  learned,  the  length 
of  time  in  service,  and  what  was  done  while  in  service.  In 
this  way  the  applicant  will  give  definite  information  con- 
cerning his  work  and  will  not  have  a  chance  to  branch  off 
into  meaningless  generalities.  Every  question  should  be  so 
framed  that  the  answer  to  it  must  be  brief  and  give  definite 
information  about  one  thing. 

Some  firms  require  the  applicant  to  state  age,  whether 
married  or  single,  whether  he  uses  drugs,  liquor,  or  tobacco, 
whether  he  belongs  to  a  union  or  not,  whether  he  is  a  citizen 
of  the  country,  if  he  knows  anyone  in  the  plant,  why  he  left 
his  former  place,  the  number  of  people  depending  on  his 
wages,  whether  he  speaks  English  and  can  read  and  write, 
what  wages  he  expects,  what  he  previously  earned,  does  he 
look  for  further  advancement,  why  he  wants  to  be  employed 
by  that  particular  plant,  and  sometimes  even  other  questions. 
One  large  concern  asks  no  less  than  forty  questions  of  every 
prospective  employee.  When  one  goes  to  that  extent  he  is 
getting  data  which  even  if  truthfully  given  would  be  unnec- 
essary for  any  but  the  most  unusual  conditions.  The  data, 
however,   cannot  be   depended  upon  after  it  is   obtained. 


RECORD   OF   THE   WORKERS  237 

Men,  especially  those  in  middle  life,  are  very  apt  to  misstate 
their  ages.  Several  years  ago  a  large  concern  determined  to 
find  out  the  ages  of  all  of  its  employees,  both  those  who  had 
been  long  in  service  and  those  who  were  just  being  engaged. 
In  hardly  any  case  did  the  men  state  their  exact  age.  The 
younger  men  overstated  their  age  from  one  to  five  years,  and 
the  older  men  understated  their  age  five  years  and  more.  In 
one  case  a  man  of  more  than  sixty  years  told  the  clerk,  "I 
am  forty-three,  and  if  you  come  around  thirty  years  from 
now  I'll  still  be  forty-three." 

Men  resent  questions  of  an  inquisitorial  nature.  They 
rarely  object  to  stating  whether  married  or  single;  but  when 
asked  why  they  want  to  be  employed  in  the  plant  or  whether 
they  expect  any  advances  in  wages,  they  feel  they  are  being 
asked  what  a  workman  once  called  ' '  fool  questions  anyway. ' ' 

Much  more  information  can  be  obtained  about  the  man 
by  looking  up  references.  Some  firms  make  it  a  point  to 
send  out  blank  forms  to  previous  employers  of  an  applicant 
whom  they  contemplate  hiring.  Others  look  up  the  refer- 
ences of  every  man  who  applies,  so  that  they  will  have  a 
trustworthy  list  of  available  candidates.  The  letter  seeking 
information  about  the  employee  should  be  framed  in  such  a 
way  that  the  former  employer  can  answer  very  briefly  and 
definitely  questions  which  will  give  one  a  very  good  idea  of 
the  capabilities  and  personality  of  a  man.  One  form  of  a 
letter  of  this  character  is  shown  below. 

Dear  Sir: 

has  applied  for  a  place  as 

and  has  given  your  name  as  reference.     Will  you  kindly  answer 

the  following  questions  regarding ,  and  if  there  is 

any  other  information  relating  to  him  which  is  of  interest,  we 
shall  be  indebted  to  you  for  it. 

1.  How  long  was  the  above  man  employed  by  you? 

2.  In  what  capacity? 

3.  What  was  his  rate  per  hour? 

4.  What  advances  did  he  get,  if  any? 


238    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

5.  Is  he  a  good  mechanic? 

6.  Are  his  habits  good? 

7.  Is  he  regular  in  attendance  and  industrious? 

8.  Why  did  he  leave? 

Any  information  you  give  us  will  be  treated  as  strictly  confi- 
dential, and  we  shall  be  glad  to  answer  requests  of  a  similar  nature 
regarding  men  who  give  our  name  as  reference. 

Very  truly  yours, 


This  letter  embodies  questions  which  can  be  accurately 
answered  with  little  trouble  on  the  part  of  the  individual 
who  receives  it.  Some  officials  object  to  telling  the  public 
or  business  rivals  what  wages  they  pay  their  workmen.  If 
experience  shows  that  firms  are  unwilling  to  state  the  wages 
they  have  paid  to  past  employees  it  is  well  to  omit  the  ques- 
tion, and  in  fact  all  questions  which  they  believe  another 
company  would  not  care  to  answer.  The  reason  for  leaving 
out  such  questions  is  that  if  there  are  too  many  objection- 
able requests  there  is  a  strong  probability  of  the  letter  being 
ignored. 

After  one  has  obtained  full  information  concerning  the 
man,  the  next  step  is  to  keep  a  record  of  him  as  a  worker. 
No  recording  scheme  is  of  value  unless  it  records  actions  as 
well  as  opinions.  By  this  is  meant  that  one  of  the  most  un- 
safe bases  for  judgment  of  a  man's  ability  is  what  some 
individual  thinks  of  him,  unless  the  estimate  is  supported 
by  evidence  which  shows  the  basis  for  the  opinion. 

The  scheme  which  keeps  record  of  the  employees  should 
do  two  things.  In  the  first  place,  it  should  keep  accurate 
record  of  what  each  person  is  doing  so  as  to  enable  the  fore- 
man and  other  officials  to  place  the  men  to  the  best  advan- 
tage in  the  plant,  and  in  the  second  place  it  should  make 
it  impossible  for  men  to  be  put  on  the  pay-roll  who  are  not 
doing  the  work  they  are  expected  to  do,  or  who  may  not  be 
in  existence  at  all. 


RECORD  OF  THE   WORKERS  239 

A  good  employee  must  at  least: 

1.  Be  regular  in  his  attendance,  prompt  in  his  appear- 
ance at  starting,  and  faithful  in  his  stay  in  the  plant. 

2.  He  must  be  diligent  while  within  the  plant. 
8.  He  must  be  efficient. 

It  was  shown  in  the  previous  chapter  how  the  plan  of  wage 
payment  develops  the  diligence  and  efficiency  of  the  em- 
ployee, but  no  matter  what  the  wage  scheme  is,  unless  it  has 
back  of  it  some  recording  device  to  keep  track  of  what  a  per- 
son is  doing,  it  is  impossible  to  gather  data  for  the  establish- 
ment of  a  good  wage  system,  or  to  determine  the  cost  of  the 
article;  and  it  is  likewise  impossible  for  the  management  to 
ascertain  who  are  the  good  and  who  are  the  poor  employees. 
A  man  is  a  good  man  for  the  firm  if  his  average  record  is 
good,  and  a  poor  man  for  the  firm  if  his  average  record  is 
poor.  The  basis  for  determining  his  standing  should  be, 
"What  has  he  done?" 

Foremen  are  very  apt  to  make  wrong  estimates  of  men, 
because  they  do  not  know  their  averages  of  efficiency.  For 
example,  in  one  place  there  is  a  bright,  capable  man  who 
has  on  numerous  occasions,  in  face  of  considerable  difficulty, 
erected  engines.  His  work  has  always  been  done  with  few 
men,  and  these  not  of  the  best,  yet  he  has  not  made  a 
serious  mistake  in  the  erecting  of  several  engines.  There  is 
another  man  who  on  two  separate  occasions  was  likewise 
given  some  engines  to  erect.  On  these  two  occasions  it  hap- 
pened, through  laxity  on  the  part  of  the  shop  management, 
that  he  was  able  to  borrow  men  from  other  gang  bosses,  and 
the  engines  he  had  to  erect  were  of  such  a  nature  that  he 
could  use  nearly  all  the  temporary  bolts  and  other  material 
which  the  other  gang  boss  had  been  compelled  to  collect  in 
order  to  erect  some  previous  machines.  The  first  man's  in- 
genuity in  gathering  material  enabled  the  second  man  to  take 
advantage  of  these  conditions,  and  in  addition  he  used  some 
laborers  who  were  not  properly  charged  to  the  job.  In  the 
17 


240   THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

course  of  the  erection  he  made  a  great  many  mistakes,  had 
holes  drilled  in  the  wrong  places,  which  made  it  necessary 
to  have  them  tapped  out  and  filled  with  plugs,  he  did  nearly 
twice  as  much  actual  work  in  getting  the  cylinders  and  hous- 
ings in  the  proper  place,  and  his  work  all  through  was  de- 
cidedly that  of  an  amateur.  Nevertheless  his  engines  were 
done  in  a  week's  less  time  than  were  the  other  man's.  He 
had  established  for  himself  a  record  in  the  plant,  and  when 
there  was  an  opening  for  advancement  he  was  given  prece- 
dence over  his  rival.  Workmen  in  the  humbler  positions 
are  sometimes  compelled  to  submit  to  such  conditions.  The 
foremen  do  not  mean  to  be  unjust.  They  cannot  be  alto- 
gether blamed  for  advancing  the  wrong  man,  when  that  per- 
son makes  a  spectacular  showing.  In  the  case  above  cited, 
if  there  had  been  exact  time  records  kept  of  all  the  time  ex- 
pended on  each  engine,  there  would  have  been  a  considerable 
showing  in  favor  of  the  first  man  who  did  not  get  the  reward. 

There  is  nothing  so  fatal  to  the  discipline  of  a  plant  nor 
so  disastrous  to  its  smooth  and  profitable  working  as  to  have 
a  body  of  men  irregular  in  their  appearance,  who  come  late 
and  go  out  at  odd  times. 

Efficiency  is,  to  a  great  extent,  a  matter  of  faithfulness; 
and,  if  a  firm  insists  upon  regular  and  prompt  appearance, 
it  is  paving  the  way  for  good  work.  There  is  only  one  way 
to  stop  irregularity — make  it  unprofitable.  If  a  firm  weeds 
out  the  non-dependable  individuals,  it  will,  before  long,  de- 
velop a  good  working  organization.  To  weed  out  these  un- 
desirables one  should  have  an  accurate  record  of  the  entering 
and  leaving  time  of  all  the  workers  in  the  concern. 

One  of  the  most  effective  devices  of  time  recording,  and 
the  one  first  adopted,  is  the  time  check.  This  is  used  in  a 
variety  of  forms. 

1.  The  in-board  out-board  form.  At  the  entrance  of  the 
works  are  placed  two  boards,  one  marked  "out-board," 
placed  near  the  gate,  and  the  other  marked   "  in-board, '^ 


RECORD   OF  THE  WORKERS  241 

placed  farther  toward  the  work  rooms.  Every  man  is  as- 
signed a  numbered  check,  which  hangs  with  the  correspond- 
ing number  on  one  or  the  other  board  according  as  he  is  in 
or  out  of  the  works.  While  the  men  are  filing  in,  taking 
their  checks  off  the  out-board  and  hanging  them  on  the  in- 
board, a  watchman  stands  near  by  to  see  that  no  one  takes 
other  than  his  own  check.  The  gate  is  closed  as  soon  as  the 
signal  for  starting  work  is  given,  so  that  no  one  can  get  to 
his  check  after  starting  time  without  calling  the  timekeeper's 
attention  to  the  fact. 

2.  A  modification  of  the  above  scheme  is  to  give  the  men 
actual  possession  of  the  check,  which  they  drop  in  a  box  on 
entering  the  works.  Obtaining  the  time  record  by  either 
method  is  a  simple  matter.  After  the  plant  is  started,  all  the 
checks  are  in,  and  the  timekeeper  makes  a  record  of  the  num- 
bers. In  the  second  plan  he  takes  the  checks  into  the  work- 
rooms and  returns  them  to  the  men.  In  this  way  he  comes 
into  actual  contact  with  each  workman,  so  that  there  is  no 
possible  means  by  which  one  man  can  drop  another's  check 
into  the  box  without  being  detected. 

3.  The  third  plan  dispenses  with  the  check.  The  work- 
man is  given  a  number,  which  he  must  announce  as  he  en- 
ters a  specified  gate.  A  clerk  at  the  entrance  crosses  off  the 
number  as  the  employee  calls  it  out.  With  this  scheme,  it 
is  impossible  for  a  man  to  give  more  than  one  number,  and 
the  elerk  has  an  immediate  record  of  the  men  who  are  in  the 
plant. 

4.  While  these  schemes  are  effective  for  plants  of  mod- 
erate size,  or  where  the  work-rooms  are  close  to  the  entrance, 
they  fail  to  be  thoroughly  satisfactory  when  the  departments 
become  scattered  over  a  large  area.  Unless  there  be  some 
kind  of  a  check  on  the  men  after  they  enter  the  main  gate, 
those  disposed  to  shirk  will  take  advantage  of  the  opportu- 
nity to  waste  time  in  getting  to  their  places  after  they  have 
recorded  their  entrance.     To  prevent  these  losses  the  large 


242    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

firms  have  been  forced  to  adopt  some  plan  which  would  re- 
cord the  employee's  entrance  into  the  department  in  which 
he  is  due.  A  check  plan  of  surmounting  the  difficulty  is  to 
have  a  clerk  distribute  the  checks  at  some  main  entrance, 
and  then  require  each  man  to  hang  his  check  upon  a  board 
within  the  department  in  which  he  is  working.  This  scheme 
proves  effective  in  insuring  the  prompt  appearance  of  the 
men  in  their  departments,  but  it  involves  more  clerical  work 
than  is  necessary,  because  it  requires  a  set  of  clerks  at  the 
entrance  gates  as  well  as  another  set  who  make  record  of  the 
checks  as  they  are  hung  in  the  departments.  In  order  to 
reduce  clerical  work  to  a  minimum  and  at  the  same  time 
record  the  time  accurately,  mechanical  devices  have  been 
perfected. 

5.  The  recording  clock.  The  greatest  improvement  that 
has  been  made  in  timekeeping  devices  is  the  introduction  of 
the  recording  time-clock.  There  are  a  number  of  styles  and 
varieties  on  the  market,  but  all  aim  to : 

1.  Enable  the  employee  to  record  his  own  time  of  enter- 
ing and  leaving  the  plant,  thus  preventing  errors  on  the  part 
of  timekeepers. 

2.  Enable  the  timekeeper  to  compute  readily  the  number 
of  hours  each  employee  has  to  his  credit,  thus  saving  clerical 
work  in  making  up  the  pay-rolls. 

8.  Prevent  employees  from  entering  the  departments  after 
starting  time  and  leaving  before  quitting  time. 

These  clocks  are  often  used  in  connection  with  a  shop 
cost  system,  and  have  proven  very  satisfactory.    (See  Fig.  28. ) 

According  to  this  scheme  a  card  is  made  out  once  every 
week  or  two  weeks  for  each  man.  »  The  man  gets  a  num- 
bered card,  which  is  placed  in  the  rack  "out"  before  he 
enters  the  plant.  When  he  goes  to  his  department  he  inserts 
the  card  into  the  slot  A ,  depresses  the  knob  B,  which  records 
his  time  of  entering.  The  card  is  then  placed  on  the  "in" 
rack.     When  he  leaves  the  plant  he  takes  the  card  from  the 


RECORD   OF  THE  WORKERS 


243 


"in"  rack,  goes  through  a  similar  process,  and  records  his 
leaving  time,  after  which  he  places  it  in  the  "out"  rack. 
This  card  at  the  end  of  the  week,  two  weeks,  or  half  month, 
records  the  total  number  of  hours  he  was  within  the  plant, 
and  all  latenesses  or  irregular  leaving  are  stamped  in  red 
ink,  thus  calling  attention  at  once  to  his  delinquencies.     At 


By  courtesy  of  International  Time  Recording  Co.,  Endicott,  N.  Y. 

Fig.  28.— Recording  Clock  with  Cost  Equipment.     Each  clock  can 
conveniently  keep  record  of  two  hundred  people. 

the  end  of  every  day,  the  timekeeper  enters  the  daily  hours 
in  the  total  column,  so  that  at  the  end  of  the  period  the 
cards  can  readily  be  made  up  and  each  man  given  his  wages 
from  the  record.  In  many  cases  the  back  of  the  card  is  used 
as  a  check,  so  that  the  payment  is  made  by  merely  having  the 
paymaster  and  foreman  sign  and  countersign  the  back  of  it. 
In  any  case,  the  cards  for  each  man  are  kept  and  filed  under 
his  name,  thus  giving  a  truthful  record  of  his  regularity  as  a 
worker,  truthful  because  it  shows  him  by.  his  own  actions 
and  not  by  a  report  of  opinions. 


244    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

The  recording  clocks  help  in  making  out  the  pay-rolls, 
and  in  keeping  accurate  record  of  the  men  passing  in  and 
out  of  the  plant;  but  if  the  time  scheme  does  only  this,  the 
firm  has  a  very  poor  system.  Good  accounting  demands  that 
no  plan  is  complete  unless  it  can  be  verified  automatically 
from  independent  sources.  Moreover,  one  should  know  not 
only  that  a  man  has  been  present  during  a  certain  period, 
but  also  that  he  was  an  efficient  worker  while  he  was  present. 
His  efficiency  can  be  determined  by  knowing  what  he  has 
done  with  the  time  recorded  on  his  time  card. 

Several  schemes  may  be  cited  by  which  a  record  is  kept 
of  a  man's  actions  while  within  the  plant. 

1.  Send  a  timekeeper  around  every  day  to  get  from  the 
workmen  the  time  they  expend  on  each  job  or  contract. 

2.  Have  the  man  list  on  a  card  his  tasks  from  the  begin- 
ning to  the  end  of  the  day. 

8.  Have  the  man  record  on  separate  slips  of  paper  for 
each  contract  the  hours  he  spent  on  each  particular  job. 

4.  Have  the  office  attach  to  each  job,  or  piece  of  material, 
a  tag  on  which  the  workman  records  his  name  or  number 
and  the  time  for  his  operation. 

5.  Have  a  multiple  part  tag  attached  by  the  office,  so 
made  that  as  each  operation  is  completed,  the  workman  tears 
off  a  portion  on  which  is  stated  his  operation,  number,  and 
time  elapsed. 

6.  Have  the  office  make  out  a  slip  for  each  operation  to 
be  performed  on  every  piece  of  work  for  every  contract.  In 
this  case  the  man  is  allotted  the  work,  and  the  time  is 
stamped  when  he  is  given  the  paper.  When  he  returns  it, 
it  is  again  stamped,  and  the  elapsed  hours  and  minutes  will 
show  his  time  on  the  job.  Another  slip  is  immediately  given 
him,  so  that  he  has  mapped  out  for  him  his  entire  work. 

In  the  first  scheme,  the  timekeeper  is  sent  around  to  enter 
in  a  book  the  time  each  man  spends  on  each  contract.  (See 
Fig.  29. )     The  time  allotted  to  each  contract  may  be  quite 


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246    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

inaccurate,  especially  if  the  shop  has  several  contracts  or 
different  classes  of  orders.  In  one  plant  where  this  scheme 
was  in  operation,  the  men  would  give  the  wildest  kind  of 
guesses  as  to  the  time  they  spent  on  each  job.  Their  only 
care  was  to  see  that  the  amounts  they  apportioned  around 
equalled  the  total  time  they  spent  within  the  plant.  Coupled 
with  its  inaccuracy,  such  a  plan  entails  an  unnecessary 
amount  of  clerical  labor;  because  the  time  of  each  contract 
must  be  summarized  on  an  analysis  sheet  (see  Fig.  30)  be- 


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Fig.  30.— Daily  Analysis  Sheet  showing  Method  of  Distributing 

Time. 


fore  it  can  be  finally  allotted  to  the  individual  contracts. 
(See  Fig.  32, )  This  labor  has  been  reduced  to  a  very  great 
extent,  however,  by  having  the  time-book  ruled  in  columns 
for  each  contract,  and  by  inserting  in  their  respective  col- 
umns the  time  that  the  workmen  expended.  The  footings  of 
these  columns  equal  the  time  expended  on  the  different  con- 
tracts by  the  end  of  the  week.  However,  in  places  where  the 
shop  has  a  great  many  contracts  the  time-book  increases  to 
such  large  proportions,  and  the  ruling  becomes  so  elaborate 
that  the  columnar  books  become  cumbersome  and  expensive. 
The  second  scheme  of  having  the  men  list  their  tasks  on 
a  card  (see  Fig.  31)  was  introduced  for  the  purpose  of  mak- 
ing the  men  more  careful  in  apportioning  their  time,  the 
assumption  being  that  if  they  could  record  their  time  as  they 


RECORD   OF  THE   WORKERS 


247 


completed  each  job  they  would  find  it  just  as  easy  to  be  ac- 
curate as  to  be  inaccurate  in  distributing  their  labor  by  con- 
tracts. The  scheme  is  weak  in  that  it  is  almost  impossible 
to  make  men  record  their  hours  as  they  complete  their  tasks. 
In  about  eight  cases  out  of  ten  the  men  have  their  pencils 
and  cards  securely  locked  in  their  tool  boxes  during  the  time 
they  are  working.    Toward  the  end  of  the  day  they  make  out 


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Fig.  31. 


their  time,  apportioning  the  hours  very  largely  according  to 
their  fancy.  The  result  of  this  scheme  is  that  it  is  no  more 
accurate  than  the  first,  nor  does  it  save  clerical  labor,  because 
the  cards  must  be  sorted  by  contracts  and  then  totaled  on 
separate  contract  sheets  (see  Fig.  32)  before  they  can  be  re- 
capitulated. In  one  respect,  the  card  system  does  save  time. 
It  dispenses  with  the  services  of  the  timekeeper,  who  goes 
around  quizzing  the  men. 

In  the  third  scheme,  the  man  makes  out  a  separate  slip  of 
paper  for  each  contract  on  which  he  works.  (See  Fig.  33.) 
Here  the  time  is  not  apportioned  any  more  accurately  to  the 


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RECORD   OF  THE   WORKERS  249 

contracts.  The  men,  as  a  rule,  do  not  make  any  more  effort 
to  be  exact  in  their  statements  because  of  these  contract 
slips.  The  pads  of  slips,  like  the  cards,  are  either  locked  in 
the  tool  boxes  or  are  in  the  hands  of  gang  bosses,  who  give 
them  to  the  men  at  the  end  of  the  day.  The  separate  slip 
system,  however,  has  the  advantage  of  saving  the  clerks  the 
trouble  of  resorting  the  papers  to  charge  properly  the  time 
to  the  contracts.     With  this  scheme,  the  total  time  for  each 


MACHINE   SHOP 

cAJ^^aXX  it,   l9iO 


/  7>'7      NAME  J^<^^-  Ctf^x^rw^ 
Contract  No,     /^w  Ttme 


NUMBER 


Hi 


OPERATIONS 


t 


Size  3"  X  b". 

Fig.  33.  —Individual  Contract  Time  Slip. 

contract  each  day  can  be  obtained  at  once  by  one  sorting, 
and  then  by  listing  on  the  adding  machine  the  time  cost  of 
the  various  operations. 

The  fourth  method.  There  are  two  ways  in  which  the  tag 
can  be  used,  viz. ,  not  as  a  production  order,  or  as  a  produc- 
tion order.  According  to  the  first  scheme,  as  the  workman 
gives  the  piece  to  the  next  person  in  line  he  puts  on  the  tag 
(Fig.  34)  his  number  and  the  number  of  hours  he  worked, 
stating  the  operations  which  he  performed.  This  scheme 
tends  to  make  the  man  more  accurate  in  his  statements  be- 
cause the  tag  is  always  with  the  job,  and  must  be  filled  out 


250    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

before  being  handed  to  the  next  worker.  It  saves  labor  for 
the  clerks  in  analyzing  the  time  by  contracts,  because  each 
tag  stands  for  one  contract  only,  and  the  total  time  on  the 
tag  represents  the  total  direct  labor  cost  of  the  contract  up  to 
the  last  operation  performed.    The  scheme  does  not,  however, 


_.\ 

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ore»i*Trw 

Fig.  34. — This  tag  is  not  detachable.  It  shows 
the  length  of  time  and  wage  cost  of  each 
operation.  By  sorting  these  tags  by  work- 
man's number  one  can  check  the  correctness 
of  the  recording  clock  or  time  book. 


necessarily  make  the  men  more  accurate,  if  they  desire  to 
deceive ;  because  with  a  number  of  contracts  on  their  hands 
at  the  same  time,  some  being  worked  upon  and  some  await- 
ing their  efforts,  the  men,  especially  if  they  are  working 
under  a  premium  plan  or  any  kind  of  piece-rate  scheme,  will 
be  tempted  to  allot  time  in  such  a  way  that  the  contracts  do 


RECORD   OF  THE   WORKERS  251 

not  really  get  charged  with  their  proper  shares  of  time.  For 
instance,  in  one  place  men  were  paid  a  certain  price  for 
reaming  out  holes  on  a  certain  class  of  work.  They  were 
paid  another  price  for  reaming  under  other  conditions.  It 
happened  that  the  time  allotted  for  the  first  job  was  so  very 
generous  that  in  spite  of  the  fact  that  the  second  one  was 
actually  unfair,  the  men  never  complained  because  both  kinds 
of  holes  invariably  went  together,  and  instead  of  stating  the 
exact  time  it  took  to  do  each  class  of  holes  they  understated 
their  actual  time  where  they  had  the  meager  allowance,  and 
overstated  it  where  they  had  the  generous  one.  In  the  long 
run  they  obtained  unusually  high  wages,  and  the  cost  was 
exceedingly  unfairly  distributed  on  the  work. 

The  multiple  part  tag  used  as  a  production  order  is  ar- 
ranged as  in  Fig.  85.  Every  piece  of  work  must  go  through 
a  certain  number  of  steps  or  processes.  If  the  work  is  stan- 
dardized, regularly  printed  tags  may  be  attached  to  each  piece 
of  material,  as,  for  example,  in  a  stocking  factory.  If  the 
shop  manufactures  things  which  vary,  the  multiple  part  tag 
may  be  printed  in  blank  and  the  steps  filled  in  on  the  blank 
as  they  are  performed.  When  a  man  performs  his  part  of  the 
task,  he  merely  tears  off  the  step  which  he  performed,  and 
then  affixes  his  number  with  the  hours  worked.  In  this  way 
the  time  department  receives  a  record  by  contract,  and  like- 
wise by  men  by  first  arranging  all  the  slips  by  contracts,  and 
summarizing  them  on  the  contract  sheet  (see  Fig.  82) ,  and 
then  rearranging  them  by  men  and  carrying  the  wages  to 
each  man's  personal  account.  This  form  of  tag  is  very  good 
for  continuous  process  industries  or  for  work  of  a  machine 
order.  When,  however,  it  is  a  question  of  the  erecting  of 
engines  where  several  people  work  on  the  job  at  once,  and 
where  it  takes  some  time  to  finish  the  job,  the  tags  do  not  fill 
all  the  requirements,  because  it  is  difficult  to  enter  more  than 
one  man's  number  on  a  space.  For  work  of  such  a  character 
a  good  scheme  is  to  put  the  task  under  the  immediate  control 


252    THE  PRINCIPLES  OF  INDUSTRIAL  MA.NAGEMENT 

of  a  gang  boss  who  will  be  held  responsible  for  carrying  out 
the  details.  It  is  well  in  connection  with  this  plan  to  use 
Scheme  No.  6,  wherein  the  workman  secures  from  the  time 
clerk  a  slip  of  paper  indicating  the  task  his  gang  boss  gave 
him  and  the  time  when  he  began  it.    As  soon  as  he  completes 


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R«BfcER 

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Fig.  35.— Tag  detachable  along  dotted  lines.  It 
serves  as  a  production  order,  besides  show- 
ing time  of  each  operation. 

the  task  he  should  be  required  to  return  the  paper  to  the 
clerk,  who  will  stamp  the  time  returned,  and  the  elapsed 
period  of  duration  will  show  the  length  of  time  it  took  to 
perform  the  work.      (See  Fig.  86.) 

In  this  way,  the  gang  boss  need  not  keep  the  time  nor  be 
held  responsible  for  its  keeping.  The  workman  cannot  ap- 
portion the  hours  as  he  fancies,  because  he  can  start  no  task 


RECORD   OF  THE   WORKERS 


263 


without  his  order  slip,  on  which  must  be  stamped,  as  he  gets 
it,  the  time  he  received  it. 

In  order  to  use  any  of  these  devices  to  determine  the 
efficiency  of  the  men  it  is  necessary  to  make  a  record  of  the 
men.  Two  schemes  may  be  used.  If  the  work  is  paid  on 
the  piece  basis,  one  of  the  best  records  of  a  man's  efficiency 
is  the  amount  of  wages  he  draws.  This  record  can  be  kept 
in  a  wage-record  book  (Fig.  37) ,  where  the  names  of  all  the 
men  in  each  class  are  grouped,  or  an  output  record  may  be 


machine:    shop 


.191 


Work  man  5   No. 

OPERATION 


Contract   No. 


Tiro©    Started 


Time      Returned 


Elopsed        Time 


>°or    Cost     Cler-W        Only 
Rate     


Direct    Uabor. 
Tota I     


Fig.  36.— Individual  Operation  Time  Slip  for  each  Contract. 


made   on   a   separate  monthly  memorandum  output   card. 
(See  Fig.  88.) 

If,  however,  the  man  is  paid  on  the  day  plan,  it  is  neces- 
sary to  standardize  the  tasks  and  compare  workmen  who  do 
similar  classes  of  work.  If  it  is  hard  to  standardize  the 
tasks,  as  it  is  in  the  erecting  of  large  machines,  the  gang 
bosses  in  charge  of  the  erection  may  be  charged  with  their 
labor  costs  (see  Fig.  32),  and  comparative  records  made  with 
other  men  who  have  worked,  or  are  working,  on  similar  con- 


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RECORD   OF  THE  WORKERS 


265 


tracts.  The  gang  boss  can  be  held  responsible  for  too  high 
a  cost;  and  if  an  exact  and  definite  record  is  kept,  he  can  at 
once  be  notified  when  his  costs  are  running  high,  and  be 
asked  to  give  the  reasons  for  it.  If  there  is  any  complaint 
to  make  against  any  particular  men,  the  foreman  can  shift 
the  men  reported  delinquent  to  other  gang  bosses;  and  if 
through  several  trials  the  labor  costs  increase  with  these 
workmen,  proper  means  can  then  be  taken  to  improve  the 
labor  force.  This  method  of  comparison,  sometimes  termed 
the  deadly  parallel,  does  away  with  elaborate  records  and 
obviates  the  necessity  of  marking  systems  for  the  individual 


MONTHUY        KCCORO           m* 

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fi»c»           v^a^aM                C<3o«a<        /o-- 

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Fig.  38. — Monthly  Memorandum  Card  showing  Efficiency  of  Piece 

Worker. 


men.  Some  firms  adopt  a  system  of  grades  and  marks  based 
upon  an  estimate  more  or  less  accurate  of  what  each  man 
does,  and  the  number  of  mistakes  he  makes.  While  this 
scheme  may  have  some  advantages,  it  is,  for  industrial  en- 
terprises, cumbersome  and  expensive  to  keep  up,  and  it  is 
really  less  satisfactory  than  the  report  system  above  outlined. 
Of  course,  in  connection  with  the  scheme  suggested,  there  is 
an  individual  card  kept  for  the  workman  or  foreman ;  and  if 
he  is  responsible  for  any  destruction  of  material  or  breakage 
of  tools  it  is  recorded  against  him.      (See  Fig.  88. ) 

A  good  way  to  know  accurately  of  a  man's  spoiled  work 

and  mistakes  is  to  have  a  spoiled  work  slip  made  out  for  his 

work  as  it  is  spoiled.     (See  Fig.  39.)    This  should  be  signed 

by  the  workman  and  the  inspector  with  the  reasons  for  the 

18 


256    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

rejection  and  the  slip  filed  as  an  original  record.  At  the  end 
of  the  month  the  slips  can  be  summarized,  and  a  record  made 
on  his  individual  report  card.  (See  Fig.  88.)  These  indi- 
vidual cards  soon  indicate  to  the  foremen  the  inefficient 
subordinates,  who  should  gradually  be  weeded  out  of  their 
departments,  and  deserving  ones  promoted  as  opportunity 
occurs.     Every  time  a  change  is  made  in  relation  to  any 


SPOILED 

p p  PA R-r  M  p  K4X 

WORK      TICKET 

woRK  main's     No 

NATURE        Of      TJErELCT 

Machinf      No 

NO      OFFF'"Tlvr        

if'fSPECTOB 

To    be     f»lled      io     by     Co3+ 
Value    c^  +ime    o-f 

Wovkmp  n 

Clerk      only 

Vol  ye     of    work   done  cr> 

To+al 

1   r>^R 

1 

S1Z£    3kS 

Fig.  39. 


man's  position,  it  should  be  entered  on  his  permanent  file 
card.  (See  Fig.  40.)  At  the  end  of  each  year  the  general 
average  of  the  man,  as  shown  by  his  output  record  (Fig.  38), 
should  be  entered  on  the  back  of  his  Permanent  Record  Card 
filed  in  the  Employment  Bureau's  office.  (See  Fig.  40.) 
This  last  card  should  not  be  destroyed,  unless  the  employee 
IS  known  to  be  dead.  While  he  is  retained  in  the  plant,  it 
should  be  filed  in  one  drawer,  and  when  he  is  released  it 
should  be  taken  out  of  the  employed  file  and  entered  in  the 
unemployed  file,  so  that  whenever  a  man  seeks  reemployment 
he  can  be  at  once  investigated.     Some  firms  obviate  the  ne- 


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RECORD   OF  THE  WORKERS 


259 


cessity  of  copying  the  workman's  record  twice  by  combining 
the  essential  features  of  the  two  cards  shown  in  Figs.  88  and 
40,  and  filing  them  in  the  foreman's  or  manager's  office 
while  the  men  are  engaged;  and  in  event  of  discharge  or 
quitting  they  are  sent  to  the  employment  office.  In  this  way 
the  employment  office  has  on  file  only  the  former  employees, 
while  the  managers  keep  in  touch  with  the  present  help. 
This  method  of  handling  cards  has  its  advantages  and  dis- 


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advantages.  It  is  cheaper  in  cards,  filing  space,  and  copy- 
ing, but  the  cards  are  apt  to  become  soiled,  torn,  mislaid, 
and  even  permanently  lost  in  the  general  handling  and  pas- 
sage between  departments.  If  the  employment  office  retains 
its  copy  at  all  times,  then  the  loss  of  the  output  card  in  the 
shop  is  not  so  serious  as  it  is  when  only  one  card  is  kept. 

While  the  manager  should  have  a  record  of  the  efficiency 
of  each  man  in  the  plant,  that  is  not  sufficient.  He  should 
know  just  how  much  each  department  wastes  and  loses,  and 
what  have  been  the  causes  for  all  losses.  A  foreman's  effi- 
ciency is  determined  by  his  ability  to  prevent  men  from 
wasting  time  and  spoiling  material. 


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RECORD   OF  THE  WORKERS  261 

Two  plans  of  recording  defects  can  be  used,  either  sum- 
marize the  errors  in  tables  (see  Fig.  41),  or  make  a  chart  of 
the  defects  chargeable  to  each  department  according  to  their 
number  or  cost,  or  both  number  and  cost.  (See  Fig.  42. ) 
To  make  the  charts  involves  but  slightly  added  expense  above 
the  cost  of  tabulation,  because  the  information  must  be  tabu- 
lated before  it  can  be  charted.  The  added  advantage,  how- 
ever, is  worth  more  than  the  increased  cost;  because  a  chart 
shows,  at  a  glance,  tendencies  over  periods  of  months,  while 
the  table  compares  for  only  one  month  at  a  time. 

If  a  manager  keeps  these  general  comparative  records, 
and  if,  in  addition,  he  has  a  detailed  record  of  why  the 
losses  occurred  in  each  department  (see  Fig.  43),  he  can 
intelligently  criticise  the  work  of  his  lieutenants  and  can 
make  changes  which  will  be  improvements  and  not  mere 
"shake-ups." 


CHAPTER  XVII 

RECORD   OF   RAW   MATERIALS 

In  the  process  of  manufacturing  goods,  two  classes  of 
material  are  used,  direct  and  indirect  materials.  The  direct 
are  those  which  go  into  the  manufacturing  of  a  product,  and 
stay  with  it  when  it  is  in  its  marketable  form.  The  indirect 
are  goods  used  in  the  process  of  manufacturing,  but  which 
never  become  a  part  of  the  product.  In  making  a  desk,  for 
instance,  lumber,  nails,  varnish,  rotten  stone,  sand  paper, 
polishing  cloth,  and  other  materials  are  used.  The  lumber, 
nails,  and  locks  are  part  of  the  desk  when  finished;  while  the 
rotten  stone,  sand  paper,  and  polishing  cloths  though  neces- 
sary in  order  to  put  a  beautiful  finish  on  the  desk,  do  not 
appear  as  part  of  it  when  ready  for  the  consumer. 

In  making  an  engine  it  is  necessary  to  use  iron,  steel, 
brass,  and  other  metals,  and  also  molds,  oils,  waste,  and 
other  materials  which  are  quite  as  necessary  as  are  the  steel, 
iron,  and  brass,  although  they  appear  nowhere  in  the  make- 
up of  the  engine. 

Good  management  insists  upon  two  things  regarding  raw 
materials : 

1.  The  greatest  care  possible  should  be  exercised  in  pre- 
venting waste  and  losses  on  direct  material. 

2.  The  greatest  possible  economy  to  prevent  undue  expen- 
ditures for  the  indirect  materials. 

To  secure  maximum  economy  in  materials  it  is  necessary 
to: 

1.  Purchase  them  from  the  lowest-priced  firms  when 
goods  are  at  their  lowest  prices. 

262 


RECORD  OF  RAW  MATERIALS        263 

2.  See  that  the  material  comes  up  to  the  contracted 
standard  of  excellence  in  quality. 

8.  See  that  the  quantity  purchased  is  obtained. 

4.  See  that  the  goods  are  delivered  at  the  specified  time. 

5.  See  that  they  are  properly  housed  and  stored. 

6.  See  that  there  is  no  unnecessary  waste  in  the  plant. 

7.  See  that  no  losses  can  occur,  except  through  waste. 

In  order  to  accomplish  these  seven  ends  it  is  necessary  to 
have  a  complete  record  of  the  most  reasonable  supply  firms, 
to  know  the  best  time  to  purchase  goods,  and  to  have  an 
exact  checking  system. 

1.  To  attain  the  first  aim^  the  purchasing  department 
should  be  in  constant  touch  with  the  market  from  which  the 
raw  materials  are  obtained.  In  small  concerns,  some  mem- 
ber should  gather  information  as  to  the  causes  that  influence 
the  prices  of  raw  materials.  He  should  find  out  the  seasons 
when  they  are  cheapest,  should  know  the  prices  of  the  vari- 
ous usable  qualities,  and  keep  himself  informed  as  to  weather 
conditions,  crop  failures,  and  other  causes  likely  to  affect 
prices.  The  firm  should  also  take  advantage  of  the  market, 
e.g.,  if  a  cotton  manufacturer  finds  that  he  can  purchase  his 
cotton  most  advantageously  during  a  certain  month  in  the 
year,  he  should  arrange  his  finances  so  that  he  can  acquire 
his  cotton  at  that  time,  but  he  should  probably  not  purchase 
an  entire  year's  stock  of  raw  material  during  a  single  month 
or  so,  and  then  pay  storage  on  his  purchased  goods  and 
interest  on  the  money  used  to  secure  them. 

Most  companies  have  a  regular  purchasing  agent  or  pur- 
chasing department  to  look  after  securing  supplies.  In  some 
concerns,  a  very  strict  account  is  kept  of  the  price  quotations 
for  every  day  in  the  year;  and  in  some  cases,  the  price 
changes  are  charted  on  squared  paper,  and  curves  are  plotted 
showing  price  movements  for  each  day  of  the  year.  For 
most  lines  of  material,  and  for  all  ordinary  businesses,  such 
a  scheme  is  unnecessary.     Some  goods  have  higher  prices 


264    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

during  some  seasons  than  others,  and  the  management  of  the 
plant  should  endeavor  to  buy  during  the  favorable  time,  al- 
though if  he  must  borrow  funds,  the  price  he  pays  for  his 
goods  will  be  the  market  price  plus  interest,  as  well  as  stor- 
age and  insurance. 

2.  Quite  as  important  as  purchasing  the  material  at  the 
right  time  and  at  the  lowest  possible  price  is  to  have  some 
scheme  by  which  one  can  be  certain  of  purchasing  the  most 
useful  quality  of  material.  The  common  plan  is  for  the  pur- 
chasing department  to  establish  standards  for  all  of  the  ma- 
terials to  be  purchased,  and  then  have  all  goods  tested  before 
acceptance.  Many  large  concerns  have  well-equipped  labora- 
tories that  establish  standards  and  test  all  purchased  materials 
in  order  to  see  that  they  fulfil  the  terms  of  the  specifications. 
In  many  branches  of  work  it  is  not  only  desirable  to  make  a 
preliminary  test  of  the  material,  but  also  to  keep  track  of  the 
material  while  it  is  going  through  the  plant,  and  to  test  the 
finished  product  of  which  it  becomes  a  part.  This  is  espe- 
cially important  for  plants  having  no  special  department 
for  testing  materials  and  such  goods  as  are  hard  to  stand- 
ardize. 

It  is  not  difficult  to  keep  track  of  materials.  A  continu- 
ous industry  plant,  which  manufactures  several  styles  and 
grades  of  some  textile  material,  can  keep  record  of  the  raw 
material  which  goes  into  the  various  lots  of  goods  by  num- 
bering the  lots  and  recording  specifically  the  material  charged 
to  these  lots.  Whoever  buys  the  finished  product  will  have 
the  lot  number  recorded  against  his  name.  If  the  finished 
product  from  this  raw  material  should  turn  out  to  be  bad,  or 
to  be  unsatisfactory  to  the  customers  either  in  wearing  qual- 
ities or  in  other  respects,  they  will  report  to  the  manufactu- 
rer who  is  able  to  tell,  by  turning  to  the  Index  Record  (Fig. 
44),  which  shows  the  customer's  name  and  lot  number, 
what  raw  goods  proved  to  be  unsatisfactory,  and,  as  he 
keeps   a   record  of   his  purchases,  he  is  able  to  tell  from 


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266     THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

whom  he  bought  the  unsatisfactory  raw  material.  (See  Fig. 
45.) 

To  illustrate  the  records  needed  for  an  assembling  in- 
dustry an  automobile  plant  may  be  selected.  The  parts  of 
an  automobile  are  purchased  from  widely  different  sources. 
If  the  product  should  prove  unsatisfactory,  the  manager  will 
hear  specific  complaints  in  the  form  of  objections  about  some 
particular  parts  of  the  machine.  If  the  defect  is  real,  in- 
vestigation will  soon  show  whether  it  is  due  to  faulty  ma- 
terial or  to  workmanship,  and  if  proper  records  are  kept  of 
the  source  of  the  former,  it  is  not  hard  to  discover  where  the 
fault  lies.  The  fact  that  the  material  is  bought  from  widely 
different  sources  does  not  offer  any  serious  objection,  because 
the  firm,  as  a  rule,  buys  the  same  parts  from  a  very  limited 
number  of  firms,  e.g.,  the  engines  and  engine  parts  will  come 
from  one  or  two  firms,  and  their  products  have  characteristics 
which  soon  betray  their  origin. 

8.  See  that  the  quantity  purchased  is  obtained.  One  of 
the  most  fruitful  causes  of  losses  in  large  concerns  which  do 
not  have  a  good  receiving  system  is  shortness  in  weight  or 
amount  due  either  to  mistakes  or  open  dishonesty  on  the 
part  of  their  employees  and  others.  In  order  to  see  that  the 
firm  gets  aU  the  goods  for  which  it  pays,  the  usual  plan  is  to 
establish  a  store-room  and  to  let  the  order  go  through  the 
following  routine:  Have  the  purchasing  department  make 
out  the  items  in  triplicate  on  a  special  blank,  sending  one 
copy  to  the  firm  from  which  they  order,  one  to  the  receiving 
department,  and  retaining  one  on  their  own  files.  When  the 
consignment  arrives,  the  man  in  the  store-room  should  be 
compelled  to  take  his  copy  of  the  order,  compare  it  with  the 
invoice,  and  then  check  the  actual  items  of  the  invoice 
against  the  goods  received,  sign  the  two  slips,  and  send  them 
up  to  the  purchasing  department,  where  they  are  checked 
against  the  purchasing  department's  copy,  and  approved. 
The  invoice  wiU  be  sent  to  the  accounting  department,  which 


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268    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

will  select  the  paying  day  and  credit  the  firm  for  the  amount, 
while  the  other  slip  will  be  returned  to  the  store-room,  where 
it  will  be  kept  on  file.  The  store-room  records  should  be 
kept  in  the  form  of  some  kind  of  perpetual  inventory. 

A  perpetual  inventory  is  a  record  which  shows  at  once 
the  amount  and  value  or  the  amount  or  value  of  goods  on 
hand  at  any  time.  (See  Fig.  46. )  To  have  these  perpetual 
inventories  correct,  there  must  be  kept  for  each  class  of  goods : 

(a)  A  statement  of  all  the  goods  received. 

(b)  A  statement  of  all  goods  issued. 

(c)  A  balance  of  goods  on  hand. 

The  accuracy  of  the  book  inventory  is  tested  from  time  to 
time  by  an  actual  counting  and  valuing  of  the  stock  on 
hand,  and  a  comparison  of  the  results  obtained  by  this 
means  with  the  balances  shown  on  the  books. 

There  are  two  methods  of  keeping  an  inventory.  One  is, 
to  have  all  the  material  arranged  in  bins  and  racks,  and  to 
have  in  front  of  every  bin  and  rack  a  card  or  tag  on  which  is 
placed  the  amounts  of  materials  received,  with  dates  and  the 
amounts  taken  out  with  their  dates.  Two  bins  are  often  used 
to  simplify  the  keeping  track  of  the  material,  one  bin  being 
used  to  receive  goods  while  they  are  being  taken  from  the 
other.  When  the  delivering  bin  is  emptied,  it  is  used  to 
receive  material,  while  the  now  emptied  one  becomes  the  re- 
ceiving bin.  The  double  bin  idea  is  good,  if  there  is  suffi- 
cient space  available  in  the  stock-room,  because  it  lessens 
the  accumulation  of  shop-worn  stock. 

The  record  tag,  however,  is  objectionable  from  two  stand- 
points. In  the  first  place,  the  tags  are  so  widely  distributed 
that  it  is  inconvenient  to  see  just  how  the  stock  stands,  as 
shown  by  the  records.  It  is  inadvisable  to  remove  the  tags 
from  the  bins  in  order  to  ascertain  the  situation,  because  in 
the  meantime  someone  may  withdraw  things;  and,  having 
no  slip  on  which  to  enter  withdrawals,  fails  to  make  any  rec- 
ord, with  a  consequent  inaccuracy  in  the  records.     It  also 


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270    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

frequently  happens  that  the  amounts  are  put  down  on  the 
slips  carelessly,  and  sometimes  even  by  unauthorized  per- 
sons. Of  course,  this  latter  difficulty  could  be  overcome  by 
not  giving  access  to  the  store-rooms  to  anyone  who  has  not 
proper  authority,  or  who  is  not  responsible  for  goods. 

An  inventory  without  these  objections  is  a  book  ruled 
somewhat  according  to  the  form  of  Fig.  46.  The  book  is 
put  in  charge  of  a  storekeeper  or  a  clerk,  and  no  irrespon- 
sible person  is  permitted  to  take  anything  from  the  store- 
room. Everything  received  is  entered  in  the  book  from 
the  invoices,  and  everything  given  out  must  have  a  properly 
written  requisition.  Both  the  purchasing  agent's  authority 
checked  against  the  invoices,  and  the  requisitions  are  kept 
until  the  books  are  audited.  The  difference  between  these 
two  shows  the  book  balance,  and  should  always  be  repre- 
sented by  the  actual  amount  of  goods  on  hand  in  the  stock- 
room. The  balance  can  be  verified  by  inspection;  and  if, 
for  any  reason,  there  is  a  discrepancy,  an  investigation  is  in 
order. 

4.  While  a  firm  may  lose  much  on  the  value  of  the  goods 
purchased  if  it  does  not  have  a  well-planned  receiving  de- 
partment, it  may  lose  the  profit  of  an  entire  contract  if  the 
raw  material  does  not  arrive  in  time  for  use  when  wanted. 
In  order  to  get  material  delivered  in  time,  the  purchasing 
department  should  be  notified  long  enough  in  advance  to  ]3e 
able  to  anticipate  all  needs.  With  an  inventory  ledger  of  the 
type  shown  in  Fig.  46,  the  storekeeper  has  little  difficulty 
in  keeping  the  purchasing  department  informed  as  to  when 
it  should  go  into  the  market  for  more  goods.  Whenever  the 
storekeeper  finds  his  balance  to  be  below  the  minimum  limit, 
he  must  at  once  report  the  approaching  deficiency,  thus  giv- 
ing the  buyer  ample  time  to  replenish  the  stock.  The  pur- 
chasing agent  should  see  that  the  minimum  limit  is  set  suffi- 
ciently high  so  that  the  store-room  will  never  be  completely 
out  of  anything  that  may  be  needed.     The  usual  practice  is 


RECORD   OF   RAW   MATERIALS  271 

to  have  the  storekeeper  fill  out  a  blank,  telling  the  kind  of 
stock  needed  and  the  maximum  and  minimum  amounts  car- 
ried. These  reports  are  made  out  in  duplicate,  one  for  the 
information  of  the  purchasing  department,  and  one  to  be 
retained  by  the  storekeeper  for  his  own  protection.  The 
maximum  point  for  the  stock  is  fixed  in  order  to  prevent 
overbuying. 

5.  After  adequate  provision  has  been  made  for  receiving 
goods  and  reporting  deficiencies  in  deliveries  and  lowness  in 
stock,  there  arises  the  problem  of  the  care  of  the  material. 
Losses  in  material  may  be  from  three  sources : 

(a)  Bad  storage,  which  causes  actual  deterioration  in  the 
goods. 

(b)  Storage  which  makes  it  possible  for  unauthorized 
people  to  have  access  to  the  store-room,  and  to  steal  or  pilfer 
materials. 

(c)  Losses  through  waste. 

If  goods  are  properly  stored,  the  first  and  second  of  these 
difficulties  will  be  reduced  to  a  minimum.  If  judgment  is 
exercised  in  storing  material,  it  will  be  found  unnecessary  to 
exercise  the  same  precautions  over  all  materials.  It  is  un- 
necessary in  a  machine  shop  to  store  the  rough  castings  with 
the  same  care  that  one  should  exercise  in  storing  heavv  ma- 
chinery, and  no  one  would  exercise  the  same  care  in  storing 
heavy  machinery  that  he  would  exhibit  in  storing  more  valu- 
able* articles,  like  brass  ware,  oil  cups,  electric-light  bulbs, 
and  various  other  similar  supplies.  The  latter  stock  should 
be  kept  strictly  under  control,  and  it  should  be  impossible 
for  one  to  get  any  of  these  things  without  proper  authority, 
unless  by  actually  breaking  into  some  room  or  compartment. 

While  rough  castings  may  very  frequently  be  stored  out  in 
the  open,  it  is  inadvisable  to  do  so  unless  absolutely  neces- 
sary. There  is  an  instance  of  a  concern  which  had  made 
several  expensive  castings  of  hollow  wheel  segments  and 
arms,  which  it  stored  in  the  open  in  such  a  way  that  the  hol- 
19 


272    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

low  arms  were  turned  upwards.  In  the  course  of  a  severe 
winter,  which  had  many  changes  in  temperature,  the  arms 
became  filled  with  water  which  froze  solid,  and  split  them 
beyond  all  possibility  of  repair,  entailing  a  complete  loss  to 
the  company.  Had  the  foreman  in  charge  taken  the  precau- 
tion to  cover  the  openings  with  boards,  it  would  have  pre- 
vented the  water  from  getting  in  at  all. 

There  are  certain  fabric  goods,  such  as  raw  wool,  cotton, 
and  yarn,  which  must  be  kept  from  the  weather,  and  yet 
which  are  of  such  a  nature  that  there  is  no  necessity  for  tak- 
ing special  precautions  to  prevent  petty  thieving.  Workmen 
have  little  use  for  these  things  in  small  quantities,  because 
they  cannot  sell  small  lots  to  advantage ;  and,  it  is  hard  for 
them  to  dispose  of  large  amounts,  because  they  usually  have 
to  establish  relations  with  people  who  will  dispose  of  such 
materials  for  them.  Silk,  however,  must  be  very  carefully 
watched  because  of  its  value. 

The  material  on  hand  should  be  studied  with  reference  to 
the  liability  of  pilfering.  The  storage-rooms  should  be  so 
arranged  with  shelving  and  racks  that  the  material  is  at  all 
times  easily  accessible  for  inventory,  and  is  at  the  same  time 
kept  from  contact  with  vermin,  overheat,  dampness,  or  any- 
thing that  will  hasten  the  deterioration  of  the  goods. 

Besides  arranging  the  goods  so  as  to  be  available,  safe 
from  the  weather  and  secure  from  theft,  the  storekeepers 
should  so  arrange  the  material  that  it  can  be  found  by  a 
comparative  stranger.  There  are  two  methods  of  doing  this. 
One  is  to  arrange  the  materials  according  to  some  alpha- 
betical plan,  as  for  example  putting  all  brass  work,  bolts, 
buckets,  brooms,  etc.,  in  one  section;  the  next  section  fol- 
lowing with  articles  beginning  with  C,  and  so  on.  For  a 
small  shop,  where  the  variety  of  goods  is  not  large,  this 
scheme  is  sufficient.  If,  however,  the  amount  of  stores  is 
large,  or  the  variety  extensive,  of  which  some  are  being  called 
for  constantlv  while  others  are  not  so  much  in  demand,  it  is 


RECORD   OF  RAW  MATERIALS  278 

wise  economy  for  the  storekeeper  to  put  the  former  material 
close  at  hand,  and  the  less  used  in  the  more  remote  places. 
When  this  scheme  is  adopted,  the  best  plan  is  to  number  the 
bins  in  some  well-recognized  order,  and  to  have  an  index 
book,  which  lists  all  the  material  according  to  name,  size, 
and  quality  or  other  relations,  and  states,  opposite  the  de- 
scription, the  number  of  the  bin  or  section  in  which  the 
listed  material  is  to  be  found.  Such  a  scheme  saves  much 
space  in  storing,  and  the  goods  are  convenient  to  find  and 
easy  to  handle. 

6  and  7.  After  the  goods  have  been  properly  stored,  care 
must  be  taken  to  prevent  loss  of  material  by  unnecessary 
waste  and  theft.  Both  ends  can  be  accomplished  by  the  same 
method,  provided  precautions  are  taken  to  keep  everything 
under  the  absolute  control  of  the  storekeeper,  and  to  hold 
him  responsible  for  the  proper  issuance  of  goods. 

A  complete  record  of  materials  taken  from  a  store-room 
may  be  kept  in  two  ways.  One  is  the  voucher  or  requisition 
plan,  by  which  the  person  receives  the  goods  upon  the  presen- 
tation of  a  properly  authorized  voucher.  The  other  scheme, 
the  budget  system,  does  not  permit  the  issuance  of  materials 
on  vouchers.     The  two  plans  require  explanation. 

Formerly  foremen  and  workmen  found  all  supplies  open 
to  them  for  the  mere  asking.  Many  shops  and  mills  at  the 
present  time  may  be  found  wherein  the  workmen  need  only 
to  make  an  oral  request,  and  stock  will  be  given  out  without 
further  ceremony.  In  such  plants,  the  storekeeper  attempts 
to  make  a  record  by  charging  the  value  of  the  material  to  the 
contract  on  which  the  workman  says  he  is  employed.  The 
scheme  is  so  loose  that  men  frequently  obtain  many  things 
which  they  do  not  use  for  their  work  at  all.  In  one  instance 
there  were  men  working  on  some  things  which  were  exceed- 
ingly grimy  and  oily.  Their  hands  became  ingrained  with 
the  dirt.  A  happy  accident  revealed  to  them  that  the  grime' 
could  readily  be  removed  by  the  application  of  lard  oil. 


274    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

At  some  time  every  day,  while  they  worked  on  that  job,  the 
storekeeper  issued  to  each  man  about  a  half  pint  of  the  oil, 
presumably  for  the  contract,  but  which  they  actually  used  to 
clean  their  hands.  At  that  time  lard  oil  of  that  quality  cost 
about  $1  a  gallon. 

No  one  who  has  tried  the  plan  of  unrestricted  issues  has 
found  it  satisfactory  where  the  raw  products  possess  any  ex- 
changeable or  usable  value,  outside  of  the  shop.     Losses  in 


y^ORKS  REQUISITION     ON   STORE    ROOM 

STOREKCCPER^ 

The  rnafmrial    /isi^ct    ^e/o»v   and  chanfe  "^ 
CON'TffACT     A/n 

QUANTITy 

DJESCffI  PTION 

VALUe* 
PISH  UNIT 

TOTAU    ' 
VAt-UK. 

Vor_cos/-_c/erl 

r    cn,v                                                                           rOt^EMAN 

Size  3"  X  5" 

Fig.  47. 

stores  were  found  to  be  inevitable,  and  it  became  customary 
to  give  out  stores  only  to  workmen  having  authority  from 
the  foreman  in  charge  of  the  department,  or  from  some  other 
authorized  agent.  In  order  to  carry  out  this  scheme,  shop 
accountants  devised  the  plan  of  putting  in  the  hands  of 
the  foremen  regularly  printed  requisitions  ruled  much  like 
Fig.  47. 

A  workman  desiring  anything  for  his  job,  applies  to  the 
foreman  or  his  clerk,  who  fills  out  a  blank,  stating  the  ma- 
terial, with  the  amount  which  he  wants  given  to  the  man,  and 


RECORD  OF  RAW  MATERIALS  275 

then  signs  the  slip.  The  storekeeper  with  this  authority- 
issues  the  requested  goods.  In  small  shops,  where  the  fore- 
man has  comparatively  few  things  to  look  after,  this  scheme 
can  be  used  with  excellent  results.  Men  will  not  call  for 
goods  or  supplies  which  they  do  not  need,  since  the  foreman, 
being  held  responsible  for  all  goods  given  out  over  his  signa- 
ture, is  not  likely  to  authorize  the  order  without  good  reason. 
When,  however,  a  shop  becomes  large,  the  foremen  are  apt 
merely  to  sign  their  initials  in  approval  of  requisitions  made 
out  by  the  men.  There  are  shops  which  use  the  requisition 
system  with  very  poor  results.  In  one  plant  where  this 
scheme  was  in  operation,  the  men  were  building  some  ma- 
chinery which  required  the  use  of  candles.  One  or  two  of 
the  workmen  found  after  a  few  trials  that  the  foreman  gave 
his  approval  without  trying  to  remember  whether  the  mate- 
rials had  been  duplicated  in  a  previous  voucher,  and  without 
giving  much  attention  to  the  items  in  the  list.  The  O.K. 
mark  was  given  in  a  perfunctory  way,  thus  the  workmen 
could  get  the  goods  by  going  through  a  mere  formality. 
Two  men  every  day  made  a  regular  practice  of  getting  some 
half  dozen  candles  each,  which  they  put  in  their  dinner  pails 
and  took  home.  Others  obtained  brass  by  the  same  method, 
others  incandescent  lamps,  and  the  storekeeper,  who  would 
ordinarily  have  been  able  to  check  these  losses,  was  unable 
to  do  so  because  there  were,  on  an  average,  several  hundred 
requisitions  daily.  It  kept  all  the  store's  clerks  busy  deliv- 
ering the  amounts  authorized  without  doing  anything  more, 
even  had  they  felt  so  inclined. 

In  a  large  shop  it  is  asking  too  much  of  the  foreman  to 
expect  him  to  look  after  such  leaks.  His  main  work  should 
be  to  see  that  the  men  are  supplied  with  the  equipment  to  do 
the  work,  that  everybody  is  being  properly  employed,  and 
that  the  work  is  going  along  with  the  least  possible  friction. 
If  he  is  asked  to  do  anything  else,  these  important  matters 
must  suffer.     The  storekeeper  can  hardly  be  asked  to  pass  a 


276    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

judicial  decision  as  to  whether  or  not  a  man  should  have  the 
supplies  called  for  on  a  properly  authorized  voucher.  If  he 
is  expected  to  go  back  of  the  voucher,  then  it  is  he  and  not 
the  foreman  who  really  has  the  authority  to  issue  goods. 
This  would  entail  endless  friction  and  needless  waste  of  time, 
and  would  cost  more  than  the  saving  would  be  worth.  The 
fault  is  not  with  the  men,  but  with  the  system. 

Since  the  requisition  system  fails  in  checking  losses,  a 
number  of  shops  have  sought  for  some  other  device.  The 
requisition  system  would  have  succeeded  had  it  been  possible 
to  prevent  orders  being  made  out  for  more  than  the  require- 
ments of  any  job;  because  the  storekeeper  can  be  held  re- 
sponsible for  all  over-issues,  though  the  foreman  cannot. 
The  problem  was  to  introduce  a  system  that  could  utilize  the 
storekeeper's  possibilities  and  obviate  the  need  of  depending 
upon  the  foreman. 

In  order  to  construct  a  large  engine  or  electrical  generator, 
engineers  must  carefully  draw  up  plans  months  in  advance, 
and  must  show  to  the  utmost  detail  everything  which  enters 
into  the  firm's  product.  In  these  plants  the  great  losses  have 
occurred  through  the  requisition  system.  In  textile  plants 
and  continuous  industry  plants  the  voucher  system  has  been 
very  successful  in  stopping  all  unnecessary  waste  and  losses. 
In  other  concerns,  however,  where  it  has  not  proven  a  suc- 
cess, the  managers  can  use  the  very  disadvantages  of  the 
work  to  aid  their  purpose.  In  the  drawing-room  after  the 
drawings  and  plans  are  all  completed,  clerks  go  over  the  draw- 
ings and  make  lists  of  the  material  which  goes  into  the  fin- 
ished product.  This  must  be  done  in  order  to  let  the  pur- 
chasing department  or  agent  know  just  what  to  buy.  Copies 
of  these  lists  of  materials  are  sent  to  the  foremen  of  the  vari- 
ous departments  so  that  they  may  know  what  to  prepare  for 
in  the  forthcoming  new  work.  Someone  hit  upon  the  happy 
device  of  having  several  copies  made  of  the  lists  of  materials. 
One  of  these  was  given  to  the  storekeeper.     The  list  for  each 


RECORD   OF  RAW  MATERIALS  277 

contract  is  ruled  as  in  Fig.  48,  and  is  given  to  the  store 
clerk  with  the  following  instructions :  ' '  Issue  material  to  any- 
responsible  workman  who  calls  for  it,  provided  the  goods  are 
listed  on  the  sheet,  but  take  precautions  to  get  the  workman's 
number  against  every  amount  of  goods  he  takes  out.  When 
the  list  has  all  those  items  checked  off,  issue  no  more  goods 
unless  spoiled  material  is  returned,  or  some  satisfactory  ex- 
planation comes  from  the  foreman  over  his  signature  as  to 
why  the  extra  material  is  needed. ' ' 

This  is  the  budget  system,  and  it  has  a  number  of  advan- 
tages. 

1.  It  absolutely  prevents  stealing,  because  no  one  gets 
goods  unless  he  is  responsible  for  them. 

2.  It  lessens  waste  to  a  remarkable  degree,  because  any- 
unnecessary  calls  for  material  are  at  once  noted,  and  require 
much  careful  explanation  as  to  why  they  are  required,  and 
men  are  not  apt  to  be  careless  when  they  find  their  actions 
subjected  to  such  close  scrutiny. 

3.  It  inevitably  brings  scrutiny  and  questioning  when  the 
loss  occurs.     A  man  cannot  shift  his  responsibility. 

4.  It  enables  the  storekeeper  to  tell  well  in  advance 
just  what  materials  he  needs,  so  he  can  get  ready  for  the  de- 
mands. 

5.  It  lessens  the  accounting,  because  it  eliminates  the 
handling  of  the  vouchers,  their  listing  and  adding  at  the  end 
of  every  day.  In  fact,  the  storekeeper  can  make  up  his  books 
days  in  advance  if  he  so  desires. 

6.  It  enables  the  people  in  charge  to  keep  close  watch  on 
all  material,  because  by  it  one  can  predict  what  should  be 
the  condition  of  the  stock  at  any  time;  and,  if  it  is  not  in 
that  condition  on  the  appointed  day,  explanations  must  be 
made  for  shortage  in  stock  or  for  delay  in  completing  the 
contract. 

To  be  sure,  it  has  some  disadvantages. 

1.  It  cannot  be  operated  successfully  unless  the  actual 


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RECORD   OF   RAW   MATERIALS  279 

amounts  of  material  needed  for  any  undertaking  can  be 
closely  estimated. 

2.  In  special  emergencies  it  does  not  work  fast  enough. 

On  account  of  the  former  defect,  shop  managers  use  a 
modification  of  the  budget  plan  to  keep  a  watch  on  materials 
like  oil,  waste,  and  things  which  cannot  be  definitely  allotted 
to  jobs.  An  approved  plan  in  use  to  prevent  extravagance  is 
to  issue  to  each  man  a  certain  amount  of  these  materials 
every  week,  and  give  him  no  more  until  the  next  distribu- 
tion day.  One  firm  adopts  the  scheme  of  giving  the  floor 
hands  a  couple  of  pounds  of  waste  every  Saturday,  and  per- 
mits them  to  have  their  oil  cans  filled  on  certain  scheduled 
days.  Those  who  have  charge  of  the  machines  are  given 
different  allotments,  and  are  permitted  to  get  oil  at  any  time 
they  desire. 

In  a  shop  where  large  work,  made  up  of  many  parts,  is 
being  handled,  or  where  there  is  a  great  number  of  regular 
orders  going  through  daily,  the  budget  system  is  without 
question  the  most  efficient  material  record  that  can  be  de- 
vised. There  are  conditions,  however,  when  the  system  be- 
comes an  annoyance  and  expense  if  literally  carried  out. 
Suppose,  for  an  extreme  instance,  that  an  urgent  repair  job 
is  brought  into  the  shop  about  Saturday  noon,  after  all  the 
clerks  and  draftsmen  have  left  until  Monday  morning.  To 
wait  until  the  complete  lists  of  materials  are  made  out  for 
such  a  case  would  be  stupid  folly,  for  the  plant  which  needs 
the  repairs  will  want  to  be  running  by  the  time  the  clerks 
would  ordinarily  have  the  budget  ready  to  send  into  the  shop. 

For  repairs  or  special  rush  orders  of  any  kind,  a  good 
plan  to  prevent  loss  of  material  and  at  the  same  time  get  the 
work  out  in  a  hurry  is  to  give  the  foreman  or  some  respon- 
sible official  in  charge  of  the  departments  the  privilege  of 
making  special  requisitions  for  such  emergencies.  After  the 
contingency  has  been  taken  care  of,  the  special  requisitions 
can  be  assembled  and  the  amount  of  used  material  accurately 


280    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

determined  and  priced.  If,  on  comparing  the  issues  and 
costs,  as  shown  by  these  special  vouchers  with  similar  repair 
jobs  or  ordinary  output,  it  is  found  that  the  issues  have 
been  unusually  large,  an  investigation  should  be  made  and 
explanations  sought.  While  such  inquiry  does  not  of  course 
prevent  loss  or  waste  on  a  contract  that  has  left  the  shops, 
it  tells  the  management  who  is  responsible  for  losses,  and 
if  the  man  at  fault  does  not  prevent  future  overissues,  he 
should  be  discharged. 

These  unexpected  difficulties  are  apt  to  arise  at  any  time, 
and  no  system  can  be  devised  to  take  care  of  them  all  in  the 
ordinary  routine,  without  either  delay  or  friction,  or  both. 
For  such  instances  every  system  should  provide  some  short 
cut,  as  above  outlined.  It  is  under  these  conditions  that  the 
manager  proves  his  worth.  In  fact,  he  is  not  really  capable 
of  filling  his  position  unless  he  knows  how  to  make  short 
cuts  at  the  proper  time,  and  just  when  he  should  modify  his 
standard  system,  whatever  it  may  be,  to  take  care  of  unex- 
pected events. 


CHAPTER  XVIII 

RECORD   OF   FINISHED   AND   UNFINISHED 
GOODS 

After  providing  for  keeping  track  of  the  labor  force  and 
of  the  raw  materials,  there  still  remain  the  partly  finished 
goods,  the  finished  goods,  and  the  machinery,  including 
equipment.  It  is  necessary  to  keep  track  of  the  partly  fin- 
ished goods  for  several  reasons: 

1.  To  keep  the  management  informed  as  to  the  probable 
time  when  various  goods  will  be  ready  for  delivery. 

2.  To  keep  track  of  the  approximate  value  of  the  goods 
at  any  time. 

3.  To  determine  whether  departments  are  over  or  under 
equipped  with  men  and  machinery. 

4.  To  enable  the  management  to  determine  the  value  of  a 
new  contract  and  to  localize  waste  in  production. 

First,  it  is  necessary  to  know  the  approximate  time  when 
deliveries  can  be  made,  in  order  that  the  company  may  be 
able  to  satisfy  customers  as  to  its  ability  to  deliver  goods. 

Second,  it  is  highly  desirable  to  know  the  value  of  any 
goods  up  to  their  particular  state  of  completion,  because  it 
enables  the  management  to  determine  what  are  the  most  ex- 
pensive steps  in  the  process,  and  makes  it  possible  to  de- 
termine in  case  of  fire  what  his  losses  have  been  in  partly 
finished  goods. 

Third,  it  is  well  to  know  which  are  the  undermanned  and 
equipped  and  overmanned  and  equipped  departments  with 
relation  to  each  other.  One  cannot  be  too  careful  as  to  the 
way  in  which  money  is  spent  to  balance  the  plant.  If  a  con- 
cern does  not  know  its  strong  and  weak  points  in  production, 

28X 


282    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

it  is  in  danger  of  spending  money  uselessly  or  of  giving 
appropriations  to  some  well-equipped  department  for  further 
improvements,  which  it  really  does  not  need  and  cannot  use 
because  of  the  condition  of  the  rest  of  the  plant.  True  econ- 
omy does  not  consist  in  buying  the  latest  improvements  in 
machinery  unless  the  whole  plant  is  fully  capable  of  utilizing 
the  improvement  to  the  best  advantage. 

Partly  finished  products  give  rise  to  a  complicated  prob- 
lem of  accounting.  Goods  bought  at  a  certain  price  as  raw 
material  have  their  value  constantly  increased  by  the  addi- 
tion of  labor,  power,  and  of  certain  costs  in  the  form  of  over- 
head expenses,  insurance,  reserves  for  depreciation,  interest, 
and  the  like.  One  day  the  goods  are  worth  little  more  than 
the  raw  material.  A  week  later  they  may  be  completed.  If 
a  particular  kind  of  product  is  being  manufactured,  various 
amounts  of  a  large  order  are  worth  different  values  at  the 
same  time,  because  the  material  is  going  through  in  lots,  so 
that  it  is  not  in  the  same  state  of  completion  at  any  given 
period. 

From  the  standpoint  of  the  nature  of  orders  sent  into 
plants,  there  are  two  kinds  of  manufacturing  possible : 

1.  For  a  general  stock  from  which  the  goods  are  taken  as 
the  sales  are  reported.  Examples  of  this  type  are  furnished 
in  the  making  of  hats,  shoes,  textiles,  furniture,  pianos,  and 
almost  all  ordinary  goods  consumed  in  a  community. 

2.  For  a  specific  contract,  as  illustrated  in  the  produc- 
tion of  locomotives,  large  machinery,  steamboats,  and  in 
building  operations. 

If  it  be  desired  to  keep  close  watch  on  all  the  goods  in 
the  partly  finished  state  with  their  degrees  of  completion, 
there  must  be  a  perpetual  inventory  or  record  of  unfinished 
work.  To  accomplish  this,  it  is  necessary  to  carry  into  effect 
two  ideas  that  have  been  found  imperative  elsewhere  for  the 
attainment  of  successful  management : 

1.  Divide  the  plant  into  departments. 


RECORD  OF  FINISHED  AND  UN|^IN;1§HED  .'GOOI^S  .^83 

2.  Use  the  production  order  and  have  each  finished  oper- 
ation reported  by  departments  to  the  accounting  division. 

The  departmental  method  of  running  an  organization 
is  to  divide  the  establishment  into  a  number  of  sections. 
Each  division  is  under  a  foreman,  who  is  held  responsible 
for  a  certain  number  of  steps  in  the  process  of  manufacture. 

The  production  order  is  an  instrument,  or  a  series  of  in- 
struments (see  Figs.  85  and  36),  made  out  by  the  central 
authority,  presenting  in  written  form  the  instructions  to  be 
followed  in  various  departments  of  a  plant  in  order  to  pro- 
duce a  given  commodity.  It  may  or  may  not  be  a  part  of  a 
voucher  or  budget  system.  The  production  order,  in  its 
strictest  sense,  only  tells  what  things  shall  be  done;  it  does 
not  necessarily  keep  track  of  material  used.  However,  wher- 
ever a  production  order  plan  is  used,  it  almost  always  com- 
bines with  it  some  kind  of  a  material  record,  and  whenever 
the  budget  system  is  put  into  operation,  it  invariably  uses 
some  form  of  the  production  order.  This  instrument  follows 
the  goods  through  all  the  departments  in  the  manufacturing 
process ;  and  as  they  pass  from  one  to  the  other,  the  order 
can  be  made  the  basis  for  keeping  record  of  the  work  as  it 
progresses  through  the  plant.  To  do  this,  one  need  only  re- 
quire each  manufacturing  division  to  notify  the  accounting 
office  of  the  number  of  production  orders  received  and  the 
amount  of  work  expended  on  each  order  during  the  day. 
This  can  be  done  in  connection  with  the  material  budget  and 
time-check  system,  and  in  fact  is  usually  a  part  of  the  time- 
record  scheme.^  In  this  way  the  officials  of  the  concern 
have  a  constant  exact  record  of  the  value  of  goods  in  the 
process  of  manufacture. 

The  simplest  type  of  plant  is  one  which  manufactures  a 
product  like  sugar  or  refined  oil.  The  product  comes  into 
the  plant  in  a  bulk  that  can  easily  be  measured,  and  is 

1  See  Chapter  XVI. 


284;  TOE  ?R3[N!?)I^I.E$  OF  INDUSTRIAL  MANAGEMENT 

passed  from  one  department  to  the  other,  either  by  pumps 
or  gravity.  The  quantities  can  be  definitely  measured,  al- 
most if  not  quite  automatically,  at  the  end  of  each  step  in  the 
process  by  simple  registering  devices  on  the  tanks,  convey- 
ing tubes,  or  receptacles.  Nothing  need  be  handled.  The 
only  attention  required  is  to  see  that  the  machinery  is  in 


Workman 

No. 

BA 

G    FILTERS 

1 

Tank  No. 

SUGAR   DELIVERED 

Mixture  N^ 

CHAR.  PURIFIERS 

SWEET  WATER 

COSTS • 

No. 

Am+. 
Gala. 

Spec. 
Grav. 

Am+. 

Specific 
Gravity 

tobor 

Gross 

Per  lb. 

Prod. 

Uoprod. 

Fixed  Chcjs. 

SUGAR  RECEIVED 

Amt.  on 
Hand 

Tiwe 
Hrs. 

5pec«J 

6a/3. 

Specific 

Gravi+y 

Gali. 

Sp.G. 

To+ol 

•  For  Cosf  Clerk  only 

Fig.  49.— Record   SHp  showing  Amount  of  Goods  which  passed 
through  a  Department  in  Bulk. 

condition.  Of  course,  there  may  be  wastes  in  the  chemistry 
of  the  process ;  but,  if  these  are  once  revealed  by  the  scientist, 
the  measuring  gauges  can  be  made  to  show  their  importance. 
In  such  a  plant,  the  task  resolves  itself  into  making  a 
permanent  record  of  the  product  of  each  department,  as 
shown  by  the  weighing  of  the  solids  and  the  readings  of  the 
registers  on  the  tanks,  stills,  boilers,  and  other  holders  of 
the  liquids,  and  the  length  of  time  each  amount  took  to  pass 


RECORD  OF  FINISHED  AND   UNFINISHED  GOODS    285 

through  every  particular  step  in  the  process.  If  these  slips 
(see  Fig.  49)  for  each  day's  work  are  sent  to  the  cost  clerk, 
he  can  add  the  direct  labor  cost  on  each  portion  of  the  prod- 
uct ;  and  can  apportion  thd  percentage  that  the  said  depart- 
ment carries  of  the  managerial  expenses — rent,  taxes,  interest, 
depreciation,  repairs,  and  the  like,  and  thus  determine  unit 
costs.  Each  department  can  be  required  to  fill  out  forms 
like  Fig.  49,  and,  at  the  end  of  the  day,  send  them  to  the 
cost  clerk,  who  can  enter  them  on  a  cost  ledger  sheet,  ruled 
something  like  Fig.  50. 

In  a  plant  of  this  character,  where  nothing  is  sold  except 
from  general  stock,  it  is  desirable  to  know  what  has  been  the 
amount  of  waste  in  different  mixtures,  as  well  as  their  stage 
of  completion  within  the  plant.  The  former  can  be  deter- 
mined very  readily  by  making  note  of  the  total  amount  of 
the  various  ingredients  of  the  mixture,  and  noting  at  the  end 
of  the  process  the  total  amount  of  the  different  kinds  of  fin- 
ished products  obtained  from  this  mixture.  If  accurate 
ledger  record  is  kept  of  the  material  as  it  passes  from  one 
'step  of  the  process  to  the  other,  one  can  tell,  by  merely  look- 
ing on  this  summary  page,  the  amount  that  has  been  received, 
the  amount  that  has  passed  through,  and  the  balance  on 
hand.  One  can  also  tell  the  extent  of  the  loss  that  has  been 
entailed  in  purifying  the  product  to  any  particular  degree. 
If,  at  any  time,  a  new  order  should  come  in  for  a  lot  of  ma- 
terial, or  if  a  cargo  of  new  raw  material  should  be  delivered, 
the  manager  of  the  plant  can  turn  to  the  ledger  sheets  and 
ascertain  just  what  is  the  condition  of  the  orders  under  way, 
and  how  soon  he  can  utilize  the  raw  material  awaiting  his 
disposal,  or  how  soon  he  can  deliver  any  unusual  orders. 
The  ledger  can  also  tell  him  whether  or  not  one  department 
is  smaller  in  capacity  than  it  should  be  to  bring  about  the 
best  results  for  the  firm.  In  fact,  the  ledger,  if  well  kept, 
affords  just  as  accurate  an  inventory  of  goods  in  process  of 
manufacture  as  of  the  raw  materials. 


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RECORD  OF  FINISHED  AND  UNFINISHED  GOODS    287 

In  the  manufacture  of  hats,  shoes,  furniture,  and  similar 
materials,  there  is  a  more  difficult  problem.  The  product 
cannot  be  measured  in  bulk,  and  the  time  taken  to  manufac- 
ture cannot  be  recorded  for  each  lot  in  a  group  way.  The 
commodities  are  made  up  of  pieces  which  must  be  handled 
as  units,  and  the  steps  in  fabrication  are  such  that  each 
product  must  be  acted  upon  separately  by  the  attendant  at 
each  machine. 

A  good  way  to  keep  account  of  products  of  this  type  is  to 
pass  them  through  the  factory  in  small  quantities.  Hat  fac- 
'tories,  shoe  establishments,  and  textile  mills  divide  their 
products  into  lots  which  may  include  pieces  of  so  many 
yards,  or  comprise  one,  two,  three,  or  more  dozens  units  or 
pairs.  A  production  order  is  written  out  for  each  lot  of 
goods,  and  two  methods  may  be  used  to  record  the  exact 
condition  of  the  lot  in  the  process. 

1.  The  production  order  may  be  arranged  in  the  form 
of  a  tag  having  detachable  slips.  (See  Fig.  85.)  As  each 
operator  finishes  his  step  in  the  process,  he  detaches  his  por- 
tion of  the  tag,  and  sends  it  to  the  accounting  department, 
where  all  tags  are  summarized  on  a  partly  finished  goods 
record  sheet  for  goods  which  pass  through  departments  in 
lots.  (See  Fig.  51.)  To  determine  what  is  in  each  depart- 
ment by  Fig.  51,  one  need  only  note  the  number  of  lots 
which  have  been  received,  but  which  have  not  been  passed 
f)n  to  another  machine  or  step.  If  one  of  the  departments 
has  received  a  great  number  of  lots  and  doe3  not  seem  to  be 
delivering  them  as  rapidly  as  they  are  turned  in  to  them,  the 
management  can  at  once  search  out  the  reasons,  which  may 
be  lack  of  men,  insufficient  machinery,  or  may  need  more 
ability  on  the  part  of  the  foreman  to  get  the  work  out. 

2.  According  to  the  other  scheme,  a  tag  or  slip  is  made 
out  for  each  operation  (see  Fig.  86) ,  and  every  day  the  fore- 
man of  each  division  makes  a  list  of  the  jobs  he  finishes  and 
then  gives  this  record  to  the  accounting  department.     In  the 

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RECORD  OF  FINISHED  AND  UNFINISHED  GOODS    289 

accounting  department  these  totals  may  be  summarized  on  a 
sheet  like  Fig.  52.  This  sheet  gives  the  head  of  the  plant  a 
good  idea  of  what  is  going  on.  Some  firms  use  this  balance 
scheme  to  very  good  purpose.  A  certain  large  wagon  manu- 
facturer calls  together  all  of  his  foremen  every  day,  and  has 
them  list  on  a  big  blackboard  their  receipts  from  and  deliv- 
eries to  every  other  department,  with  their  balances  on  hand. 
If  any  foreman  is  short  of  goods  or  runs  below  his  standard 
amount  of  receipts,  he  records  his  deficiencies  in  red  chalk. 
If  his  receipts  and  balances  of  goods  are  unusually  large,  he 
records  them  in  blue  chalk.  The  result  is  that  each  foreman 
knows  what  every  one  else  is  doing ;  and  the  manager  of  the 
plant  having  all  the  foremen  together,  can  discuss  with  them 
why  they  are  deficient.  If  anyone  is  to  blame,  the  difficulty 
can  be  located  at  once,  and  remedied  with  remarkable  lack 
of  friction.  This  latter  scheme  of  handling  material  can  be 
used  very  effectively  in  assembling  processes. 

This  chapter  has  advocated  the  use  of  the  production 
order  form  of  tag  or  slip,  to  gather  the  time  of  each  contract 
on  the  summary  books.  (See  Figs.  85  and  36.)  While  this 
is  in  most  cases  the  best  scheme  to  employ  in  machine  shops 
and  similar  plants,  these  ledgers  can  be  used  in  connection 
with  other  kinds  of  time-slips  like  those  illustrated  in  Figs. 
81,  88,  and  84,  or  even  with  the  daily  contract  time-book 
(Fig.  29). 

The  work  of  gathering  the  material  on  the  ledger  sheet  is 
practically  the  same  in  each  case.  A  ledger  sheet  of  this 
character  shows  the  length  of  time  the  work  has  been  in  each 
stage  of  the  process,  and  gives  the  management  some  idea 
when  it  should  be  finished. 

The  general  question  of  cost  accounting  is  not  under  dis- 
cussion here,  but  if  records  are  kept  in  the  manner  indicated 
by  the  chapters  on  keeping  track  of  the  labor  and  keeping 
track  of  the  raw  material,  it  requires  little  or  no  added  ex- 
pense to  fill  in  the  column  shown  on  these  ledger  sheets  for 




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RECORD  OF  FINISHED  AND  UNFINISHED  GOODS    291 

determining  exact  labor  and  material  costs.  Indirect  ex- 
penses and  power  costs  will  have  to  be  apportioned  from  the 
general  books  to  the  plant's  output. 

To  keep  track  of  the  finished  product,  little  need  be  done. 
In  ordinary  enterprises  the  shipping  department  receives  all 
its  finished  goods  from  its  own  factory.  Some  businesses 
are  of  such  a  nature  that  the  product  is  shipped  as  soon  as  it 
is  completed ;  but  where  stock  is  kept  on  hand,  the  keeping 
of  an  inventory  is  quite  as  important.  The  following  for- 
mula suggests  an  efficient  method  of  keeping  such  an  inven- 
tory: 

[Amounts  received  from  factory  (both  quantity  and 
value)  +  Balance  already  on  hand  (quantity  and  value)  + 
Returns  (quantity  and  value)  ]  —  [Sales  (quantity  and  value) 
+  Amounts  given  out,  but  not  sales,  as  gifts,  etc.  (quantity 
and  value)]  =  Inventory  on  hand  (quantity  and  value)  or 
(A  +  B  +  R)— (S  +  G)==I.     (See  Fig.  53.) 

To  make  any  inventory  thoroughly  reliable,  an  adequate 
system  of  original  records  should  be  provided  in  addition  to 
a  proper  summary  record  in  the  ledger.  A  very  good  plan  is 
to  have  the  shipping  department  give  a  receipt  for  every  con- 
signment of  goods  received  from  the  factory.  The  receipt 
should  be  made  out  in  triplicate,  one  copy  being  retained  by 
the  foreman  of  the  factory,  one  by  the  shipping  department, 
and  the  third  sent  to  the  accounting  department,  to  be  used 
as  a  basis  for  the  ledger  entries,  and  to  be  filed  away  for 
reference. 

When  the  shipping  department  receives  goods  returned 
from  dissatisfied  customers,  or  from  any  other  source  than 
the  factory,  another  form  of  receipt  should  be  made  out  in 
triplicate,  one  to  be  sent  to  the  customer  or  source  from  which 
return  comes,  one  to  be  retained  by  the  shipping  department, 
and  one  to  be  sent  to  the  accounting  department. 

The  shipping  department  should  send  goods  out  only  on 
receipt  of  an  order  from  the  sales  department.    The  sales  or- 


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RECORD  OF  FINISHED  AND  UNFINISHED  GOODS     293 

ders  should  be  made  out  in  triplicate,  the  original  to  be  re- 
tained in  the  sales  department,  duplicate  and  triplicate  sent 
to  the  shipping  clerk.  The  shipping  clerk  will  fill  out  the 
order  so  far  as  possible,  checking  off  all  the  items  he  has 
been  able  to  deliver.  He  will  file  the  duplicate  for  his  own 
reference,  taking  care  to  notify  the  sales  department  of  any 
inability  to  fill  out  all  the  requirements  of  any  order,  and 
will  send  the  corrected  triplicate  to  the  accounting  depart- 
ment, where  it  will  be  used  as  an  original  record  for  the 
ledger  credits. 

Ledgers  of  this  character  can  be  used  for  every  kind  of 
work.  They  give  the  management  an  accurate  statement  of 
the  various  kinds  of  finished  product  on  hand  at  any  time, 
and  are  an  aid  in  determining  future  policies  in  manufac- 
ture. If  goods  are  not  being  sold  rapidly,  the  reasons  can  be 
investigated  to  ascertain  whether  slow  sales  are  due  to  laxity 
on  the  part  of  the  sales  department,  or  to  inferiority  in  man- 
ufacture. Ordinarily,  a  large  percentage  of  returns  indicates 
the  latter  cause,  and  a  careful  investigation  will  reveal  the 
true  cause  of  the  plant's  deficiency. 


CHAPTER  XIX 

RECORD   OF   EQUIPMENT 

The  equipment  of  a  plant  may  be  separated  into  four 
divisions : 

1.  Hand  tools  and  machine  attachments  used  by  the 
workmen  in  the  course  of  their  work  throughout  the  day. 

2.  Patterns,  templets,  and  other  ^orms  used  for  special 
classes  of  work  or  for  special  occasions. 

3.  Drawings,  records,  and  plans. 

4.  The  power  machinery  which  makes  goods  under  the 
direction  of  the  workmen. 

In  keeping  track  of  each  of  these  four  classes  of  material, 
a  different  principle  is  involved.  The  tools  of  the  first  class 
are  used  constantly,  and  to  keep  track  of  them,  they  must  be 
put  in  a  place  convenient  for  the  workmen.  The  tools  should 
be  so  arranged  in  the  tool-room  that  anyone  can  find  them  at 
once,  even  if  he  is  a  comparative  stranger  to  the  room,  and 
the  system  of  accounting  for  stock  must  enable  the  store- 
keeper at  any  time  to  tell  who  has  a  tool  out. 

As  has  already  been  stated,  the  best  situation  for  the  tool- 
room is  near  the  center  of  the  shop.  If,  however,  there  is 
any  great  difference  in  the  rate  of  wages  paid  to  the  men,  it 
will  be  cheaper  to  place  the  tool-room  nearer  to  the  machines 
at  the  section  of  the  shop  where  the  most  skilful  and  expen- 
sive labor  is  situated.  Frequently,  however,  the  highly  paid 
workers  have  one  or  more  helpers,  so  our  rule  will  again  have 
to  be  modified.  It  is  the  workmen  who  have  no  helpers,  and 
yet  are  highly  paid  that  should  be  nearest  the  tool-room. 

1.  To  keep  track  of  the  tools  within  a  tool-room  in  such 
a  way  that  anyone  can  find  them  is  not  so  difficult  a  task  as 

294 


RECORD   OF   EQUIPMENT  295 

it  might  seem.  In  a  plant  like  a  textile  establishment  which 
has  really  little  if  any  need  for  hand  tools,  the  tool-room  is 
small  and  unimportant,  and  almost  any  system  suffices  that 
makes  it  possible  to  know  who  have  possession  of  the  tools; 
but  in  a  machine  shop  where  there  are  a  great  many  small 
tools  and  attachments  for  machines,  hammers,  chisels,  drills, 
wrenches,  taps,  dies,  gauges,  and  a  hundred  other  different 
kinds  of  instruments  constantly  in  greater  or  less  demand,  a 
convenient  system  must  not  depend  upon  the  memory  of  any 
one  or  of  several  individuals. 

Two  systems  are  in  general  use  to  keep  track  of  materials 
in  machine  shops: 

(a)  The  tools  may  be  arranged  in  classes  and  groups.  By 
this  scheme,  all  cutting  tools  are  kept  together  in  the  cutting 
class,  the  machine  cutters  being  put  in  a  group  by  them- 
selves, while  the  hand-cutting  tools  are  grouped  separately. 
Within  these  groups  the  tools  are  arranged  according  to  their 
use.  If  they  bore  holes,  they  go  under  boring  cutters;  if 
they  cut  grooves  or  fiat  surfaces,  they  are  plane-cutters. 
They  are  also  arranged  in  order  of  sizes.  One  firm  carries 
out  this  scheme  to  a  very  elaborate  extent. 

The  tools  in  the  tool-room  should  be  kept  in  good  condi- 
tion by  the  tool-shop.  The  workmen  should  be  relieved  of 
the  necessity  of  grinding  or  caring  for  them.  There  should 
always  be  a  large  supply  of  the  more  commonly  used  tools, 
and  at  no  time  should  a  workman  fail  to  obtain  a  tool  when 
wanted.  There  should  be  no  red  tape  necessary  to  get  a  tool. 
The  workman  should  be  held  responsible  for  a  tool  after  he 
has  received  it,  but  should  not  be  put  to  any  unnecessary 
trouble  to  get  it. 

According  to  the  plan  outlined,  accuracy  in  record  and 
availability  for  use  can  be  achieved  by  stamping  on  the  tools 
their  proper  letters,  so  that  one,  even  a  stranger,  need  only 
look  for  the  drawer  or  compartment  bearing  the  same  letters, 
in  order  to  put  them  away  in  their  proper  place. 


296    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

(b)  The  other  scheme  is  to  classify  tools  by  numbers  in- 
stead of  by  letters  or  any  mnemonic  sign.  According  to  this 
plan,  every  tool  is  indexed,  and  a  person  desiring  a  particu- 
lar one,  turns  to  the  index,  finds  its  number,  and  goes  to  the 
corresponding  case  or  drawer.  There  is  little  difference  in 
the  principles  of  the  two  schemes.  Both  permit  the  tools 
most  generally  used  to  be  stored  in  convenient  places,  and 
they  also  keep  all  tools  of  the  same  class  together. 

Quite  as  important  as  being  able  to  find  the  tools  in  the 
tool-room  is  the  ability  to  tell  where  the  tool  is  in  the  shop. 
Many  tools  are  used  intermittently,  and  numerous  duplicates 
are  unnecessary.  Large  wrenches  are  required  on  big  jobs, 
but  even  the  largest  shops  do  not  need  to  have  many  dupli- 
cates, provided  the  tool-room  clerk  is  able  to  tell  where  a  tool 
is  at  any  time.  A  good  device  is  to  give  the  workman  a  set 
of  brass  checks  stamped  with  his  number,  so  that  the  tool 
clerk  may  put  a  check  in  place  of  the  tool  which  the  work- 
man has  secured.  This  check  acts  as  a  receipt  for  the  tool, 
and  is  not  to  be  returned  to  the  workman  unless  he  delivers 
the  tool  to  the  clerk.  If  a  workman  calls  for  a  tool  not  on 
hand,  the  tool  clerk  can  promptly  tell  who  in  the  shop  has 
it.  The  workman  may  then  borrow  the  tool,  or  leave  his 
check  with  the  toolkeeper,  get  the  other  man's  check  and 
exchange  it  for  the  tool.  The  second  workman  might  also  go 
directly  to  the  first  man  and  exchange  a  check  for  the  tool. 
The  next  time  the  first  workman  goes  to  the  tool-room  he  can 
exchange  this  check  for  his  own. 

By  this  simple  scheme  shops  can  keep  track  of  all  tools 
while  out  of  the  tool-room.  With  the  check  system,  work- 
men can  be  made  to  deliver  all  borrowed  tools  before  they 
permanently  leave  the  plant,  because  they  can  be  compelled 
to  return  a  full  complement  of  checks  before  they  will  be 
given  a  clearance  paper  from  the  tool-room. 

The  system  indicates  who  has  any  particular  tool  out  at 
any  time,  but  it  does  not  show  how  many  tools  any  particular 


RECORD   OF   EQUIPMENT  297 

workman  has.  If  it  is  desirable  to  keep  track  of  this,  the 
tool  clerk  can  have  a  list  of  the  workmen's  numbers,  and 
enter  therein  the  numbers  of  the  tools  each  workman  takes 
out.  There  are  so  few  advantages,  however,  in  having  this 
information  that  it  is  seldom,  if  ever,  recorded.  In  some 
cases  expensive  or  special  tools,  as  a  diamond-cutter,  may 
require  a  special  receipt  from  the  workman,  but  otherwise 
the  tool-room  clerk  can  keep  sufficiently  close  watch  on  the 
tools  a  man  has  out  by  keeping  record  of  the  checks  a  work- 
man has  lost,  and  by  noting  his  calls  for  any  tools  which 
would  be  unusual  for  his  particular  work  in  the  shop.  If 
the  man  is  about  to  leave  and  has  lost  checks,  the  clerk  need 
merely  refer  to  his  memorandum,  and  insist  that  all  other 
checks  be  accounted  for  by  tools.  This  may  seem  a  free  and 
easy  method  for  one  to  keep  track  of  thousands  of  tools  and 
hundreds  of  workmen;  but,  as  a  matter  of  fact,  the  fine  that 
is  attached  to  the  loss  of  checks  makes  it  unprofitable  for  a 
man  to  take  tools  which  are  not  extremely  valuable  in  their 
nature,  and  in  those  cases  the  special  r(5ceipt  is  ample  pro- 
tection. 

Besides  keeping  the  tools  convenient  to  the  men  and 
keeping  track  of  them  in  the  tool-room  and  in  the  shop,  the 
tool  department  should  be  able  to  report  to  the  management 
the  kinds  and  makes  of  the  most  serviceable  and  profitable 
tools.  A  convenient  and  reliable  scheme  is  to  have  stamped 
on  the  shank  of  the  tool,  or  in  some  inconspicuous  part,  the 
date  of  its  purchase  and  the  cost  mark;  and,  if  it  is  not 
already  there,  the  name  of  the  firm  which  made  it.  If  this 
plan  is  followed  and  care  is  taken  to  issue  the  tools  under 
comparison,  an  equal  number  of  times,  the  management  can 
soon  tell  which  makes  are  proving  the  most  efficient  and 
economical.  It  can  also  determine  from  this  record  what  is 
still  more  important :  the  actual  expenses  connected  with  the 
tool  department  and  what  classes  of  work  are  the  most  ex- 
pensive users  of  tools. 


298    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

2.  The  second  class  of  equipment — patterns,  jigs,  tem- 
plets, and  other  forms  and  guides  for  the  workmen — are  not 
important  in  many  lines  of  manufacturing.  In  many  others, 
however,  they  are  used  almost  continuously.  In  some  classes 
of  production  the  forms  or  patterns  must  be  renewed  every 
year  or  so,  not  because  they  are  worn  out,  nor  because  the 
firm  ceases  to  manufacture  goods  of  a  similar  grade,  but 
simply  because  the  whim  of  fashion  has  called  for  something 
else  a  little  different  in  shape  or  form.  In  the  shoe  industry 
the  question  of  lasts  is  troublesome.  Some  factories  sell 
their  lasts  to  concerns  that  manufacture  a  cheaper  or  lower 
grade  of  shoe,  and  hence  do  not  cater  to  the  more  fastidious 
public.  Even  when  lasts  are  sold,  they  are  sold  at  a  loss  to 
the  concern.  Eventually  every  shoe  manufacturer  must  sacri- 
fice a  great  deal  of  money  yearly  through  the  discontinuance 
of  certain  styles  and  the  introduction  of  others.  Great  as 
this  loss  is  in  total  amount,  it  does  not  put  a  heavy  burden 
on  any  one  pair  of  shoes,  because  a  concern  manufactures 
thousands  of  pairs  in  a  year,  and  the  money  expended  upon 
the  lasts  is  distributed  through  so  many  pairs  of  shoes,  that 
it  adds  but  little  to  the  cost  price  of  the  shoe. 

Other  industries  find  patterns  and  forms  just  as  essential 
as  does  the  shoe  industry.  An  engine  cannot  be  built  with- 
out using  many  expensive  patterns  and  forms  of  various 
kinds,  and  general  machine  shops  rapidly  accumulate  a 
large  number  of  patterns.  The  drawing-room  receives  the 
specifications  for  all  contracts,  and  it  can  make  possible 
heavy  savings  in  using  old  forms  and  patterns  if  they  hap- 
pen to  know  of  previous  jobs  whose  patterns  can  be  adapted 
to  the  new  undertaking. 

It  is  important  for  the  drawing-room  to  know  just  what 
patterns .  it  has  at  any  particular  time.  Few  engines  made 
at  different  times  are  exactly  alike,  yet  every  new  engine 
must  have  a  complete  set  of  patterns,  which  will  in  all  prob- 
ability never  be  duplicated.     The  patterns  may  represent 


RECORD  OF  EQUIPMENT  299 

several  thousands  of  dollars  in  labor  and  materials,  and  be 
useful  for  only  one  contract.  It  is  not  to  be  assumed  that 
these  patterns  represent  a  dead  loss,  for,  although  they  may 
never  be  used  again  as  they  stand,  they  can  frequently  be 
utilized  for  other  orders  by  making  alterations.  Because 
they  may  be  adapted  to  other  work,  manufacturing  firms  al- 
ways keep  patterns,  whether  the  work  is  likely  to  be  dupli- 
cated or  not.  If  a  plant  has  been  in  operation  for  some  time, 
these  patterns  may  accumulate  to  embarrassing  proportions, 
and  unless  there  is  some  system  of  registration  for  them  and 
the  drawings  which  they  represent,  duplications  and  partial 
duplications  of  these  forms  will  constantly  occur  and  occasion 
large  losses.  Companies  early  began  to  develop  plans  for 
cataloguing  drawings  and  patterns. 

3.  One  scheme  was  to  classify  the  drawings  by  the  num- 
ber of  the  contract,  and  to  list  the  name  of  each  by  the  part 
of  the  engine  it  represented.  Thus,  a  drawing  of  a  high- 
pressure  cylinder  of  the  121st  contract  would  be  entitled 
"high-pressure  cylinder,"  and  in  some  less  prominent  place 
on  the  sheet  would  be  printed  "Contract  No.  121."  The 
patterns  would  be  numbered  in  a  corresponding  manner. 
The  system  is  faulty,  because  the  contract  number  gives  no 
intimation  as  to  the  kind  of  job  represented.  Should  it 
happen  that  the  shop  turns  out  water  turbines,  steam  pumps, 
hoisting  engines,  blowing  engines,  and  marine  engines,  Con- 
tract No.  121  might  be  anyone;  and  since  patterns  and  draw- 
ings were  filed  and  stored  in  order  of  the  number,  the  disad- 
vantages were  many,  but  the  system  had  in  it  suggestions 
for  a  better  one. 

Few,  if  any,  contracts  go  through  a  drawing-room  with- 
out the  chief  engineer  and  the  draftsmen  knowing  for  whom 
they  are  intended.  Involuntarily  the  number  of  the  contract 
becomes  associated  with  the  purchasing  firm;  and  the  said 
firm  is,  in  nine  cases  out  of  ten,  engaged  in  a  particular  busi- 
ness.    If  the  company  orders  a  blowing  engine,  it  is  in  the 


300    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

iron  business,  and  not  likely  to  call  for  marine  engines. 
The  contract  numbers  become  attached  to  the  firm's  work, 
and  the  firms  become  associated  with  certain  classes  of  ma- 
chinery. To  the  men  in  the  drawing-room,  a  new  order  for  a 
blowing  engine  calls  to  mind  the  firms  which  have  ordered 
similar  engines  in  the  past,  and  they  recall  the  contract 
numbers  which  have  been  attached  to  those  firms.  This  co- 
incidence gave  rise  to  another  system  of  tabulating  drawings 
and  patterns,  viz.  : 

To  classify  alphabetically  according  to  the  names  of  the 
firms  who  order.  This  system  is  superior  to  the  previous 
one  in  that  it  simplifies  the  search  for  drawings  of  machinery 
of  a  similar  type,  and  reduces  the  probability  of  drawings 
being  overlooked.  To  the  older  men  in  the  office  a  firm's 
name  suggests  the  kind  of  machinery  it  is  in  the  habit  of 
securing,  and  they  involuntarily  start  to  hunt  them  up  when 
machinery  of  that  type  is  reordered.  Although  in  a  mod- 
erate-sized plant  the  system  is  quite  satisfactory,  in  a  very 
large  one  it  fails  because  new  men  are  constantly  coming  in 
who  do  not  know  all  the  ordering  firms,  nor  remember  their 
characteristics.  Besides,  ordering  firms  at  times  radically 
change  their  work  and  call  for  other  things,  so  that  impor- 
tant drawings  may  be  forgotten,  especially  if  there  has  been 
any  change  in  the  administration  of  the  engine-building 
company.  The  system  tends  to  fail  because  men  are  com- 
pelled to  remember  too  many  names,  and  too  much  about 
past  orders. 

An  effective  system  is  to  classify  the  machinery  into 
groups,  and  give  each  group  a  distinctive  number.  Engines 
of  the  reciprocating  marine  type  might  all  come  under  500, 
if  simple  engines  their  number  will  be  510,  if  compound  520, 
triple  expansion  530,  and  so  on.  Should  the  steam  expan- 
sion of  the  simple  engine  occur  in  two  cylinders,  its  number 
would  be  512;  by  letting  the  units  represent  the  number  of 
cylinders,  a  triple  expansion  engine  with  five  cylinders  would 


RECORD   OF   EQUIPMENT  801 

be  585.  The  arrangement  of  the  cylinders  over  each  other 
determines  the  number  of  connecting-rods,  piston-rods, 
cranks,  housings,  and  the  like,  which  the  engine  will  require. 
Frequently  a  five-cylinder  engine  will  have  four  of  the  cylin- 
ders arranged  in  pairs  tandem,  while  the  fifth  will  be  single. 
An  engine  of  that  character  will  have  three  connecting-rods, 
three  cranks,  three  sets  of  housings  or  their  equivalent,  three 
sets  of  eccentric  rods ;  in  brief,  the  engine  will  be  built  on  a 
triple  basis  throughout.  These  kinds  of  arrangements  could 
readily  be  indicated  by  the  addition  of  decimals.  Thus,  if  a 
quadruple  expansion  marine  engine  had  six  cylinders  ar- 
ranged— two  tandem,  two  single,  two  tandem — it  could  be 
expressed  546.2112.  Should  there  be  any  other  characteris- 
tics that  were  desired  to  be  shown,  it  could  be  done  by  the 
insertion  of  letters,  or  some  other  simple  device.  Thus, 
suppose  the  above  quadruple  expansion  engine  had  surface 
condensers,  they  could  be  indicated  by  a  letter  "S"  substi- 
tuted for  the  decimal,  thus  546S2112.  A  jet  condenser  would 
be  shown  by  the  substitution  of  a  letter  "J"  instead  of  the 
letter  "S." 

A  system  of  classification  based  upon  this  general  outline 
possesses  the  advantage  of  giving  easy  accessibility  to  all 
kinds  of  machinery  of  any  class  made  at  any  time.  In  ad- 
dition to  its  application  in  the  drawing-room,  it  can  be  used 
in  the  pattern  storage  houses. 

A  convenient  scheme  for  the  arrangement  of  the  patterns 
is  to  apply  the  drawing-room  classification  to  the  placement 
of  the  patterns  in  the  storage  shed.  The  drawings  above 
have  been  numbered  according  to  a  certain  grouping  system, 
which  gives  characteristic  numbers  to  each  class  of  engines 
or  machinery  manufactured,  so  that  one  can  tell  at  once  by 
the  number  what  an  engine  is  like,  and  much  about  it.  If 
we  divide  up  the  pattern  storage  room  on  a  basis  of  that 
classification,  all  the  patterns  for  the  engines  and  engine 
parts  would  be  readily  accessible.    All  engines,  although  they 


302    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

may  differ  widely  in  their  design,  structure,  and  size,  have 
certain  parts  which  are  in  the  main  common,  as  cylinders, 
steam  chests,  engine  frames,  bed  plates,  shafts,  fly-wheels. 
The  patterns  may  be  grouped  either  by  contracts  as  a  whole, 
or  by  like  parts  of  different  contracts. 

The  first  scheme  has  the  disadvantage  that  patterns  of 
small  and  large  parts  and  of  dissimilar  pieces  are  likely  to 


symbol 

PATTERN  CARD 

NatneoffWterB 
OeseripHcn 

Pa^ern  mode  of 

Dote  Complied                                                          1 

Onqinally  made                            1 

for  Order                                          |  Sfored  in  BwiU.oq                     Door                    We/f                    3ec+;or> 

SKLtthof     ' 
Battern 

1 

Ho.  of  Core  boxes  wrth-ttHs  ftrttem                          /    ^ 

NOTB 

Om  «f  Hwae 


rd*  4o  b«    rctoined     in  Itte 
th«  other  «»    Orowirxj   Room 


Fig.  54.— Pattern  Record  Card.     (Front.) 


be  piled  together  at  the  expense  of  good  order  and  of  storage 
space.  If  all  the  similar  parts  of  the  various  machines  are 
grouped  together,  it  is  easier  to  find  the  same  kinds  of 
pieces;  and  if  the  system  of  arrangement  is  made  to  corre- 
spond to  the  drawing  numbers,  the  particular  patterns  can 
easily  be  located. 

In  addition  to  having  the  patterns  accessible,  it  is  highly 
desirable  that  the  drawing-room  should  know  the  exact  con- 


RECORD   OF   EQUIPMENT 

dition  of  each  pattern,  and  where  it  is  at  any  time.  This 
can  be  accomplished  by  having  filed,  in  the  drawing-room 
cards  which  give  the  number  and  complete  history  of  each 
pattern,  showing  all  alterations.  Copies  of  the  card  may  be 
kept  on  file  in  the  office  of  the  pattern  storage  rooms.  When 
the  pattern  is  taken  from  storage,  its  card  may  be  removed 
from  the  usual  filing  drawer  to  another  one,  so  that  all  the 
patterns  in  the  storage  shed  may  be  in  one  compartment, 
while  those  in  the  foundry  or  pattern  shop  may  be  in  another. 
(See  Fig.  54.) 

If,  in  addition  to  the  scheme  of  segregating  the  pattern 
cards,  to  show  those  out  of  storage  the  plan  to  be  adopted  of 
requiring  everyone  who  secures  a  pattern  to  leave  a  receipt 
countersigned  by  the  foreman  of  the  department  to  which  it 
goes,  and  of  filing  that  receipt  with  the  pattern  card,  it  be- 
comes a  very  simple  matter,  indeed,  to  trace  the  pattern  at 
any  time.  If  any  alterations  have  been  made  on  the  pattern, 
the  nature  of  these  changes  may  be  entered  on  the  back  of 
the  card,  so  that  one  will  have  a  complete  record  of  the  pat- 
tern from  the  time  it  w^as  first  constructed  until  it  is  de- 
stroyed. 

The  principles  outlined  for  keeping  track  of  patterns  may 
be  carried  out  for  keeping  track  of  any  other  kind  of  ma- 
terial. Some  concerns  have  adopted  a  filing  scheme  based  on 
the  Dewey  Decimal  system  for  their  technical  literature. 
The  Engineering  Experiment  Station  of  the  University  of 
Illinois  has  published  several  pamphlets  showing  how  the 
Dewey  Decimal  System  of  classification  may  be  applied  to 
Engineering  and  Architectural  work.  * 

According  to  the  Dewey  system,  all  knowledge  is  sepa- 

^  Bulletins,  Nos.  9  and  13,  University  of  Illinois  Engineering 
Experiment  Station,  "An  Extension  of  the  Dewey  Decimal  System 
of  Classification  Applied  to  Engineering  Industries,"  and  "An 
Extension  of  the  Dewey  Decimal  System  of  Classification  Applied 
to  Architecture  and  Building." 
21 


804    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

rated  into  ten  classes,  and  each  class  is  given  one  of  the 
hundreds  for  a  number,  viz. : 

000,  General,  including  Astrology,  Palmistry,  and  Works  of  a 
similar  character. 
100,  Philosophy. 
200,  Religion. 

300,  Sociology  and  Economics,  the  Social  Sciences. 
400,  Philology. 
500,  Natural  Science. 
600,  Useful  Arts. 
700,  Fine  Arts. 
800,  Literature. 
900,  History. 

Each  of  these  classes  is  broken  into  nine  divisions  with  a 
tenth  division  for  general  matter  in  the  class,  and  each  divi- 
sion is  in  turn  separated  into  nine  sections.  The  sections 
are  again  subdivided,  and  the  process  may  be  carried  on 
indefinitely. 

"To  show  clearly  the  working  of  the  system  the  divisions  of 
Class  6  (useful  arts)  and  the  sections  of  Division  2  of  this  class 
(engineering)  are  given. 


600, 

Useful  Arts. 

620, 

Engineering. 

610, 

Medicine. 

621, 

Mechanical. 

620, 

Engineering. 

622, 

Mining. 

630, 

Agriculture. 

623, 

Military. 

640, 

Domestic  Economy. 

624, 

Bridge  and  Roof. 

650, 

Communication   and 

625, 

Road  and  Railroad. 

Commerce. 

626, 

Canal. 

660, 

Chemical  Technology. 

627, 

River  and  Harbor. 

670, 

Manufactures. 

628, 

Sanitary :  Water  Works. 

680, 

Mechanic  Trades. 

629, 

Other  Branches. 

690, 

Building. 

"It  will  be  seen  that  the  first  digit  gives  the  class ;  the  second, 
the  division ;  and  the  third,  the  section.  Thus  625  indicates  Sec- 
tion 5  (railroad  engineering)  of  Division  2  (engineering)  of  Class  6 
(useful  arts) .  For  convenience  a  decimal  point  is  inserted  after 
the  section  digit.  Further  subdivision  is  indicated  by  digits  fol- 
lowing the  decimal  point.     For  example,  625.2  is  the  number  indi- 


RECORD   OF   EQUIPMENT  805 

eating  rolling  stock;  625.23  passenger  cars;  625.24  freight  cars, 
etc. 

"Uses  and  Advantages  of  the  Classification  and  Index.— The 
decimal  classification  may  be  used  to  advantage  in  the  indexing 
and  filing  of  notes  and  memoranda,  clippings,  general  information, 
articles  in  technical  journals,  drawings,  catalogues,  or  books.  For 
this  purpose  the  decimal  system  possesses  certain  important  ad- 
vantages over  the  alphabetical  system. 

-  "(1)  It  groups  allied  subjects.  For  example,  suppose  the  alpha- 
betical arrangement  to  be  applied  to  a  case  of  catalogues.  The 
catalogues  of  the  various  machine  tools,  as  planers,  lathes,  drills, 
hammers,  etc.,  would  be  scattered  throughout  the  case.  With  the 
decimal  system,  on  the  other  hand,  all  these  catalogues  would  be 
grouped  together  under  the  class  number  621.9. 

"(2)  Unless  an  elaborate  system  of  cross  reference  is  used,  the 
alphabetical  scheme  is  ambiguous ;  in  many  cases  there  is  doubt  as 
to  what  letter  should  be  given  a  subject.  For  example,  take  the 
item  "Automatic  pneumatic  block  signals."  This  might  almost 
equally  well  be  indexed  under  A,  P,  B  or  S.  With  the  decimal 
system  this  item  has  its  one  number  656.256.4. 

"(3)  The  decimal  system  has  the  advantage  of  flexibility  and 
an  indefinite  capacity  for  extension.  For  the  indexing  of  books 
and  catalogues  only  the  main  division  and  sections  will,  in  general, 
be  found  necessary ;  but  for  card  indexes  of  technical  literature 
the  most  minute  subdivisions  must  ordinarily  be  used.  In  indi- 
vidual cases,  the  user  may  find  that  still  further  division  is  re- 
quired. An  extension  may  then  be  made  by  adding  another  decimal 
place,  and  if  still  further  subdivision  is  required  still  another  digit 
may  be  used. 

"The  average  engineer,  for  example,  can  easily  index  all  matter 
relating  to  traveling  cranes  under  the  single  class  number  621.872. 
The  designer  or  builder  of  cranes  may,  however,  have  so  much 
matter  relating  to  this  special  subject  that  further  subdivision  is 
needed.  By  the  addition  of  a  digit,  this  matter  may  be  divided 
into  nine  groups,  designated  by  621.872.1,  621.872.2,  etc. ;  and,  if 
necessary,  each  of  these  maybe  divided  into  nine  new  groups."^ 

While  this  system  works  well  for  the  filing  of  books,  clip- 
pings, and  drawings,  it  has  its  limitations  when  used  to  ar- 

^  Bulletin,  No.  9,  University  of  Illinois,  Engineering  Experi- 
ment Station,  pp.  2  to  4. 


306    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

range  contracts  and  patterns.  Manufacturing  firms,  as  a 
rule,  have  specialized  their  work  to  such  an  extent  that  it  is 
unnecessary  for  them  to  have  any  general  class  number  like 
621,  to  let  them  know  their  contract  deals  with  mechanical 
or  electrical  engineering  machinery.  For  locating  patterns, 
such  numbers  are  not  only  unnecessary  in  the  average  shop, 
but  are  confusing;  hence,  while  the  Dewey  system  of  classi- 
fication is  excellent  for  filing  all  information  which  the  firm 
may  gather  from  outside  sources,  a  simple  modification  like 
the  one  above  suggested,  may  be  used  to  advantage  in  cata- 
loguing patterns  and  contracts. 

4.  In  order  to  keep  a  sufficient  record  of  machines,  the 
management  should  know  the  following: 

(a)  Are  the  machines  running  to  their  full  capacity  all 
the  time  the  workmen  are  attending  to  them? 

(b)  Are  there  sufficient  machines  to  do  the  class  of  work 
required  by  the  shop? 

(c)  What  is  theup-keep  cost  of  the  machines  in  repairs, 
lost  time,  etc.,  and  the  reasons  for  these  expenses? 

(d)  What  is  the  rated  and  real  capacity  of  the  machines? 
When  a  company  purchases  a  machine,  the  salesman  is 

quite  apt  to  make  extravagant  statements  concerning  the  per- 
formance of  the  device,  and  the  apparatus  often  proves  to  be 
far  less  efficient  than  one  would  conclude  from  the  salesman's 
representation.  Manufacturers  have  frequently  been  inclined 
to  discredit  salesmen's  promises  fifty  to  one  hundred  per 
cent.  In  many  instances  such  action  is  unfair  to  the  sales- 
man and  to  themselves,  because  they  may  not  have  gotten 
the  possibilities  from  the  machinCj'and  may  blame  the  sales- 
man for  misrepresentation  while  their  own  workmen  are  at 
fault.  The  lack  of  output  may  be  due  to  prejudice  against 
the  device  on  the  part  of  the  workmen,  who,  to  prevent 
changes  in  wage  rates,  will  not  make  the  machine  produce 
to  its  utmost.  Sometimes  they  feel  that  the  output  from 
previous  machines  is  sufficient,  and  that  the  new  machine  is 


RECORD   OF  EQUIPMENT 


307 


to  be  considered  a  labor-saver,  in  the  sense  that  it  will  save 
them  from  exerting  themselves,  as  formerly,  in  order  to  make 
the  old  standard  output.  The  old  way  of  managing  a  shop 
compelled  the  foreman  to  be  alert  to  prevent  machine  hands 
from  soldiering.     If  the  boss  is  familiar  with  all  the  ma- 


By  courtesy  of  The  Bristol  Company,  Waterhury,  Conn. 

Fig.  55.— Record  Card  of  a  Bristol  Automatic  Time  Re- 
corder Applied  to  Two  Paper  Machines,  Showing  All 
Idle  Time  in  Twenty-four  Hours. 

chines  in  operation,  he  can  prevent  idleness  to  a  very  great 
extent;  but  it  is  possible  to  loaf  on  machine  work,  even  with 
the  best  and  most  knowing  overseers.  A  number  of  ingeni- 
ous devices  have  been  put  on  the  market  to  eliminate  depen- 
dence upon  the  foreman's  knowledge.  These  automatic- 
recording  devices  keep  track  of  the  power  used  per  hour,  of 
temperatures,  and  of  pressures  at  all  times.  In  fact,  one  can 
have  almost  anything  recorded.    With  them  one  can  tell  from 


808    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

the  power  and  time  records  whether  the  machine  is  using  up 
all  the  power  demanded  by  its  maximum  capacity,  and  what 
is  the  extent  of  its  idle  time  during  any  period. 

The  following  figures  and  illustrations  give  an  idea  of  the 
application  of  recording  instruments  to  industrial  conditions. 
Fig.  55  shows  an  application  of  it  to  two  paper  machines. 
Every  time  either  of  the  machines  stopped,  the  recording  pen 
for  the  machine  dropped  toward  the  periphery  of  the  card, 
and  the  duration  of  the  idleness  is  shown  by  the  length  of 
the  notch.  Figs.  56  and  57  show  the  temperature  records, 
"the  chart  No.  661,  of  December  15,  1908,  was  drawn 
shortly  after  the  installation  of  this  thermometer  on  our 
feed-water  system.  That  of  April  13,  1909,  is  from  the  same 
instrument.  A  comparison  of  these  two  will  give  you  an 
idea  of  the  improvement  it  is  possible  to  affect  in  feed-water 
temperature,  with  the  aid  of  a  sensitive,  accurate  recorder."^ 

One  great  advantage  of  all  these  recording  instruments  is 
that  no  matter  where  the  operations  are  carried  on,  the  re- 
cording apparatus  can  be  concentrated  at  any  point.  In  this 
way  it  is  possible  to  have  all  the  records  in  the  office  of  the 
foreman  or  superintendents  while  they  are  being  made. 
Many  plants,  however,  do  not  have  the  instruments  so  placed, 
because  if  they  are  going  to  get  the  greatest  efficiency  out  of 
their  men,  it  is  well  to  let  the  workers  see  just  what  kind 
of  a  record  they  are  making  while  on  duty.  The  foremen 
should  be  around  to  see  the  men  from  time  to  time,  so  there 
is  no  great  advantage  gained  by  having  the  gauges  gathered 
together  in  his  office,  or  that  of  some  superior  official.  The 
superintendent  of  a  large  plant  has  other  duties  than  watch- 
ing gauges  in  operation.  His  clerk  should  gather  the  records 
and  call  his  notice  to  any  bad  reports  or  unusual  showings 
which  need  attention.  He  will  thus  know  what  to  investi- 
gate,  and  should  not  be  troubled  with   the  records  when 

^Bulletin,  No.  Ill,  The  Bristol  Company,  September,  1909. 


310    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

everything  ■  is  going  as  well  as  present  methods  make  possi- 
ble. His  time  under  those  conditions  can  be  better  em- 
ployed in  improving  the  methods  in  operation. 

If  the  records  kept  show  that  machines  are  always  run- 
ning at  their  full  capacity,  it  is  fair  to  expect  them  to  make 
their  promised  output.  Not  only  is  it  necessary  to  see  that 
machines  are  making  their  promised  outputs,  but  care  should 
be  taken  to  see  that  they  make  it  consistently  throughout 
long  lapses  of  time.  Many  firms  keep  daily  records  of  ma- 
chine outputs  in  such  a  way  that  a  person  can  tell  at  a  glance 
how  the  department  is  running.  These  records  are  frequently 
used  in  connection  with  other  data.  Mr.  H.  L.  Gantt  in 
1903  published  a  paper,  entitled  "A  Graphical  Daily  Bal- 
ance in  Manufacture,"  to  show  how  a  daily  balance  scheme 
can  be  used  to  facilitate  getting  work  turned  out  by  a  de- 
partment. The  advantages  of  his  daily  balance  scheme,  as 
he  presented  it,  are  that  it  aids  the  foreman  by  showing  him 
at  a  glance  what  is  to  be  done,  and  what  he  has  already ^done 
on  any  particular  lot.  In  order  to  show  this  he  presents 
some  tables  indicating  his  balance  sheet  scheme,  which  are 
here  reproduced.      (See  Fig.  58.) 

One  will  observe  that  this  is  merely  a  plan  for  keeping 
track  of  unfinished  material,  not  unlike  some  previously 
described,  but  the  scheme  can  be  used  to  determine  whether 
the  plant  is  over  or  under  supplied  with  any  kind  of  ma- 
chines. Indeed,  Mr.  Gantt,  in  his  note  at  the  bottom  of  the 
right  of  Fig.  58,  calls  attention  to  the  fact  that  it  can  be  so 
used:  "This  table  shows  the  way  Fig.  58  would  look  if  the 
works  were  short  of  frame-drilling  capacity. ' '  Any  one  of 
the  schemes  used  to  keep  track  of  partly  finished  goods  would 
likewise  show  any  deficiencies  in  machine  equipment,  pro- 
vided the  foreman  could  prove  it  was  not  due  to  lack  of  labor 
or  to  his  own  insufficiency. 

After  a  firm  is  satisfied  that  its  machinery  is  working  to 
its  full  promised  capacity,  and  has  demonstrated  that  it  has 


RECORD   OF    EQUIPMENT  311 

sufficient  machinery  on  hand  to  do  the  work  required,  the 
next  question,  and  an  exceedingly  important  one,  is  to  de- 
termine which  machines  are  really  the  most  economical  to 

"|-c*MTT  A.  L.  CO.  PRODUCTION  SHEET 

1 6  Enaln...  N.  V.  C.  Schenectady  Works,  Machine  Shop  No.  1 


PART. 

FRAMES. 

RAILS. 

Pur.  Ord.;  Sketch; 
Pat.  or  Card  Dr.  No. 

OPERATION        a 

1 

Slotted. 
Drilled 

a 

* 

1 

1 

Jfl 

i 

1 

s 

1 

To    Be    Begun. 

To    Be    Finished. 

No.   Wanted.          is 

>S 

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IS 

30 

30 

30 

'5 

«5 

30 

No.  Finished.     ^    | 

1     1 
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It 

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it 

It 

II 

It 

It 

6      6     ,.     ., 


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4.    14       2       ti       « 


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3     ..      ..      ^^y       »     '3 ^^^jo      6     «8       3     «3       3     >3  »  «o 

4 «.      ..       a     30       2     IS       a     IS  4  14 

5 a     IS 4  18 

6 .••     ••  6  »4 

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"      ....  a3     ..     .».    ♦ a     IS  I 

••     ....  »4     .. » 

.^      ....«     r » 

"     ....  a6 »^ 

This  side   shows  how   the   table   would    look   if  the 
works  were  short  of  frame  drilling  capacity. 


13      '        This  side  shows  a  record  as  actually  kept. 


Fig.  58.— Records  Showing  Output  of  Machines.  Adapted  from 
a  Paper  Given  by  H.  L.  Gantt,  "A  Graphical  Daily  Balance 
in  Manufacture,"  Transactions  American  Society  Mechanical 
Engineers,  vol.  xxiv,  pp.  1322-36,  Figs.  290,  291. 

have.  A  large  textile  establishment  once  introduced  a  num- 
ber of  costly  looms  which  were  guaranteed  to  turn  out  a  cer- 
tain quantity  of  cloth  within  a  given  period.  In  testing  the 
looms  it  was  found  that  they  made  the  output  with  little 


312    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

apparent  effort,  but  when  it  came  to  examining  the  output 
records  of  the  departments,  it  was  found  that  the  looms  were 
not  nearly  so  efficient  as  they  were  expected  to  be.  It  was 
found  on  investigation  that  the  loss  in  output  was  due  to  lost 
time  taken  in  repairing  and  looking  after  the  machinery. 
The  manager  then  kept  a  record  of  the  amount  of  repairs  and 
of  lost  time  on  the  looms,  and  found  to  his  amazement  that 
they  were  not  nearly  so  efficient  as  the  ones  that  had  been 
discarded.  Upon  further  investigation  he  found  that  the 
operators  were  unfamiliar  with  the  electrical  starting  devices, 
and  through  their  ignorance  were  causing  the  firm  a  loss  of 
hundreds  of  dollars.  Many  concerns  keep  records  of  this 
type  for  every  machine  in  their  plant,  and  they  find  the 
records  are  helpful  in  determining  what  machines  are  best 
suited  to  their  purposes,  as  well  as  being  useful  in  determi- 
ning the  repair  and  depreciation  charges.      (See  Fig.  59.) 

Within  recent  years,  some  important  textile  concerns 
have  adopted  an  effective  inventory  scheme.  A  plan  is  made 
of  every  department  of  the  establishment,  and  on  it  is  indi- 
cated every  machine  or  piece  of  equipment  within  the  sec- 
tion of  the  plant  represented.  All  pieces  in  the  department 
are  numbered,  no  matter  how  small,  and  are  shown  in  the 
drawing.  (See  Fig.  60. )  In  addition  a  separate  record  is 
kept  containing  an  accurate  description  of  the  machines,  and 
also  information  relating  to  their  prices,  dates  of  purchases, 
rates  of  depreciation,  from  whom  purchased,  by  what  power 
driven,  when  and  how  disposed  of,  and  the  amount  realized 
on  their  disposal.      (See  Fig.  59.) 

The  drawings  alone  present  considerable  information. 
They  show  the  dimensions  of  the  plant  or  department,  and 
indicate  the  exact  position  of  every  piece  of  equipment,  while 
on  the  same  sheet  with  the  drawing  is  tabulated  a  brief  de- 
scription of  the  machines,  the  number  of  each,  the  methods 
of  driving  them,  and  a  description  of  the  motive  power.  A 
more  detailed  statement  of  these  items  is  entered  on  type- 


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314    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

written  sheets,  which  give  full  descriptions  of  the  inventory. 
Whenever  a  change  is  made  in  the  equipment,  the  drawing 
is  altered,  the  table  is  corrected  to  correspond  with  the 
change,  and  the  descriptive  part  of  the  record  is  corrected 
in  order  to  give  accurate  indication  of  the  new  conditions 
within  the  plant. 

Accuracy  and  fairness  in  keeping  these  inventory  records 
are  essential.  Insurance  companies  prefer,  at  times  may 
even  insist,  that  they  be  kept  by  disinterested  appraising 
firms  in  order  to  guarantee  absolute  trustworthiness.  It  is 
not,'  however,  an  imperative  necessity  for  an  outsider  to  keep 
such  records ;  because  fallacies  may  be  detected  from  internal 
evidence.  Save  in  unusual  cases,  machinery  is  acquired  by 
purchase,  a  bill  of  sale  is  always  given  with  such  transac- 
tions, and  the  machine-manufacturing  companies  keep  their 
sales  records.  In  case  of  any  dispute  the  insurance  com- 
panies can  refer  to  these  records;  and  thus,  by  making 
proper  depreciation  allowances,  obtain  a  close  approximation 
of  the  value  of  the  machinery  from  an  independent  source. 

This  inventory  record  possesses  a  number  of  advantages. 
Aside  from  its  importance  in  case  of  fire,  it  keeps  the  firm 
thoroughly  informed  as  to  the  exact  status  of  all  its  posses- 
sions within  the  plant.  The  true  value  of  the  equipment, 
both  in  total  and  in  individual  items,  is  never  obscured. 
Even  if  the  records  are  not  accurately  kept  they  serve  as  a 
convenient  basis  for  tracing  out  the  original  value.  It  fre- 
quently happens  that  the  assured  will,  unless  he  possesses 
such  a  record,  be  unable  after  a  fire  to  tell  just  what  his 
losses  are.  Many  times  he  overlooks  important  items  in  his 
loss  statements  to  the  insurance  companies,  and  does  not 
recover  amounts  to  which  he  is  justly  entitled.  Insurance 
companies  feel  quite  justified  in  paring  down  claims  when- 
ever their  validity  is  in  any  doubt,  and  there  are  often  pos- 
sibilities for  disagreement  where  no  such  record  is  kept. 
Seldom,  indeed,  after  large  conflagrations,  are  adjustments 


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816    THE  PRINCIPLES  OF  INDUSTRIAL  MANAGEMENT 

made  without  frictioiij  and  always  at  the  expenditure  of  con- 
siderable sums  of  money.  These  sums  far  exceed  the  cost  of 
installing  a  proper  fire  inventory  system,  while  the  after- 
expenditures  are  never  satisfactory. 

If  fire  never  occurs  in  the  plant,  the  additional  work  re- 
quired to  keep  this  type  of  inventory  is  sd  small  compared 
with  the  advantages  gained  by  having  a  chart  of  the  equip- 
ment constantly  in  view  that  it  is  well  worth  the  trouble  to 
have  it,  if  only  to  help  keep  the  other  records,  as  shown  in 
Fig.  59,  which  refers  to  output  and  repairs  on  machines. 
The  plat  record  shows  at  a  glance  all  the  things  that  the  firm 
owns,  while  the  other  figure  gives  the  details  of  each  individ- 
ual item.     It  is  an  ideal  inventory  record  for  machinery. 


AN    INlTiAj        — 

^AV    AND    TO    J""  ^°  ^^NTs  ON  ^J  ''ENALTy 
^OVERDUE.       ""    *'°°    ON    THE    SEVENTH '''''■'^ 


YB   18467 


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